Donald Douglas moved to California and began his own plane-building company in 1920. The Cloudster was the first of many successes for Douglas.

Donald Douglas teamed up with David Davis to create the Davis-Douglas Company in 1920. Though the pairing would last only a year, the partnership was a productive one, resulting in the Cloudster, one of the first commercial transports. Although it wasn't successful in its intended goal of flying cross-country nonstop, its ability to carry a heavy payload impressed the military enough to guarantee the new company a future.

Douglas purchased the abandoned lot of the Herman Film Corporation and based his company - newly re-named the Douglas Aircraft Company - in Santa Monica, California. The company's next project was to build a plane that could circle the globe. Aptly named the Douglas World Cruiser, two of these aircraft successfully completed the 27,000-mile route around the world over the course of six months in 1924. More than 200,000 people greeted the plane's return to Santa Monica's Clover Field. The Douglas World Cruiser's design was incorporated into many other planes. Among them was the first commercial plane to carry U.S. air mail, the Douglas M-2. Western Air Express (a forerunner to TWA) flew the plane between Los Angeles and Salt Lake City. By the end of the 1920s, the company's achievements in building commercial planes, combined with its successful military planes, established the Douglas Aircraft Company as one of the most successful plane builders in the world.

Offering unrivaled performance and comfort, the DC-3 became Douglas’ most successful commercial plane.

As the golden age of aviation dawned, revolutionary Douglas planes were on the horizon. The Douglas DC-1, DC-2 and DC-3 were the most innovative planes of their era. Built in high numbers throughout the 1930s and '40s, thousands of DC-3s would continue to fly decades after the last plane rolled off the assembly line. World War II saw a huge increase in airplane production. One Douglas factory alone was producing a plane every hour. Over the course of the war, Douglas built nearly 30,000 planes with its wartime work force of 160,000 employees.

After WWII, Douglas, like other aircraft companies, began to branch out into non-aircraft military applications such as rocketry, missiles and space vehicles. The company, however, continued its pursuit in the lucrative commercial passenger plane market. In the 1950s, Douglas and Boeing would contend to develop the first American commercial jet airliner. Boeing took the technological lead with its 707 model introduced in 1958 by Pan Am, but Douglas was not far behind with the DC-8. The DC-8 arrived in airports in the fall of 1959 with passenger service offered by United and Delta.

Competing in the jet age, however, proved to be an expensive business undertaking. In the 1960s, Douglas felt the financial burdens from the enormous costs of developing the DC-8 and DC-9. In order to ensure a more viable future for the company, Douglas Aircraft joined forces with military and aerospace manufacturer McDonnell Aircraft in 1967 to become McDonnell Douglas Corporation.

In the 1970s, as more and more people began to fly, demand for larger planes resulted in a new kind of jet - the widebody. Boeing leaped to the front of the pack with its jumbo jet, the 747. Not to be left behind, Douglas sought to service the growing legions of travelers with the DC-10. Douglas ended up having to split the domestic airline market for mid-range widebodies with its competitor, Lockheed, which produced the similar L-1011. But unlike Lockheed which quit producing the L-1011 in 1983, Douglas persevered in the commercial aircraft business. Throughout the 1980s, Douglas continued to produce the DC-10, while introducing a new passenger jet, the MD-80.

In the 1990s, Douglas introduced two new passenger jets - the MD-90, an updated version of the MD-80 - and the MD-11, a larger version of the DC-10. Further financial strain in the 1990s took its toll on McDonnell Douglas. Airbus was in discussions to acquire the company when Boeing, made a counteroffer. Boeing's acquisition of McDonnell Douglas in 1997 made the combined company the largest aerospace firm in the world.