17th Construction Squadron was raised out of the Eastern Command Maintenance Squadron on 20 September 1949 as a Regular unit, under the command of Captain E. Phillips.

Upon formation it consisted of three troops: 8, 9 and 10. Squadron headquarters was located at Kingsford, New South Wales, along with the 9 and 10 Troops, while 8 Troop was located in the Moore Park area.

The year later, Plant Troop was raised and moved to Woomera, South Australia. It had initially been planned that the squadron would form part of a regimental formation known as the 4th Construction Regiment, but the regiment was never raised and the squadron was formed as an independent unit.

During the period between 1950 and 1965 the squadron carried out considerable construction and relief tasks both within Australia and overseas. It was involved in the construction of the Woomera Rocket Range from 1950 to 1954. In 1953 it was also involved in the site construction for project “Two Zero Zero”, an atomic weapons test site.

Between January and October 1953, the squadron worked to prepare the site ahead of the detonation of the first atomic weapon exploded on the Australian mainland, which took place in October 1953 under the guise of Operation Totem.

In 1956, work was undertaken at Moorebank where the squadron constructed a pontoon harbour and also at Randwick where work on new soldiers’ accommodation was completed.

In 1960, an element from 8 Troop was deployed to New Hebrides to help restore Port Vila after it was struck by a cyclone. The following year, 10 Troop was detached to the command of the 24th Construction Squadron and deployed to Vanimo and Passam, Papua New Guinea, where they completed road building tasks and constructed a 300-ton wharf.

In June 1963, the main body of the squadron deployed to Wewak, taking over from the 21st Construction Squadron, before returning to Australia in June 1964, having been replaced by the 22nd Construction Squadron