The origins of 106 squadron can be found in the formation of the Panamanian airline LAPSA (Lineas Aereas de Panama). This airline was used as a cover for the acquisition of ten ex-USAAF C-46 Commandos, and three L-049 Constellations, by Israeli agents in the USA during late 1947/early 1948. Eventually, nine of the C-46's and one L-049 found their way to Israel where, from 14 May 1948, they were designated as LATA, (LAhak Tovala Avirit = Air Transport 'Group' in Hebrew), operating all the overseas purchasing/supply flights for the Sherut Avir. The official date for LATAs formation is 12 June 1948. Prior to this, a C-54 chartered from American Overseas Airlines in March 1948 had comprised the air arms sole long range transport capability.

LATA had meanwhile established its main base at Zatec, Czechoslovakia, and immediately commenced an airlift of urgent military equipment to Ekron in Israel. The airlift, known as Operation Balek, included the transportation of disassembled Avia S-199's - which were used to form 101 squadron. Two war surplus C-54D's were purchased on 15 May 1948 to join LATA. These aircraft were referred to as DC-4's, and operated in civilian markings to facilitate overseas trips. The big transports also acted as lead-ships during delivery flights of Spitfires direct from Zatec. In addition, the C-46's acted as bombers on at least one occasion, (over El Arish).

After nearly one hundred return flights between Zatec and Ekron, Operation Balek was closed down on 12 August 1948 due to political pressure from America. All personnel were withdrawn from Zatec to Ekron, all overseas civil aircraft registrations were cancelled on 18 September 1948, and LATA was renamed 106 sqn in December 1948. The single L-049 was later joined by the two others from the USA. These aircraft operated in a joint military/civil role, transporting cargo from Ekron and passengers to and from Lydda. In April 1949 they were formally transferred to the newly formed airline EL AL. 106 sqn amalgamated with 103 sqn in June 1949 (other sources state May), the combined squadron's C-46 aircraft were progressively passed to Arkia Airlines.

As related in the entry for 133 squadron, 106 squadron was scheduled to be reformed on 6 June 1982 at Tel Nof, from that unit's F-15C/D aircraft. Official formation was delayed until after the ceasefire came into effect on 11 June.

106 sqn has been credited with all five of the kills claimed by the IDF/AF since the end of the Lebanon War: a pair of MiG-23MFs on 25 June 1982, a single reconnaissance MiG-25 shot down over Beirut on 31 August 1982, and finally a pair of MiG-23's shot down over Syria on 19 November 1985. The latter being the last kills so far achieved by IDF/AF Eagles.

The enormous capability of the Eagle in Israeli hands had been demonstrated in a quite different way a month earlier. On 1 October 1985, a flight of eight F-15Ds flew a round trip of over 2,500 miles (4,000 km) in order to bomb the PLO headquarters at Khaman Al-Shat, Tunis. The aircraft had to refuel from an IDF/AF Boeing 707 tanker several times during the six hour mission. The attack was launched with laser guided bombs and completed with no difficulty.

As with the F-16B and D, the high proportion of F-15Ds used by 106 squadron emphasises the fully combat capable status of these two seater "trainers".

After the invasion of Kuwait, and the approach of the UN deadline for Iraqi withdrawal on 15 January 1991, 106 sqn began flying continuous combat air patrols alongside 133 sqn, to guard against possible Iraqi aggression. In the event, these patrols were discontinued by 12 February.

From late October 1991, the IDF/AF began to receive additional Eagles from USAF stocks, to balance out reinforcement deliveries to Saudi Arabia and as a reward for loyalty during the Gulf War. Thus a further five F-15Ds were received by 106 sqn on 5 May 1992.