The English Electric Company was formed in 1918 and, during that year and 1919, acquired control of Dick, Kerr & Co of Preston, England, Willans & Robinson of Rugby, England, and the Phoenix Dynamo Manufacturing Company of Bradford. It also purchased the Stafford Works of Siemens Bros. Dynamo Works Ltd. Dick, Kerr had, in 1917, acquired the United Electric Car Company makers of trams in Preston. As part of the reorganisation the traction activities of the company were concentrated at Preston, Lancashire and continued there until 1930 when the manufacture of electrical equipment was transferred to Bradford, Yorkshire. Tramcars, bus bodies and rolling stock were, however, retained at Preston.

By the late 1920s the company was in a parlous financial state and a complex financial reorganisation, apparently backed by American Westinghouse interests, was required to save the company. The man most associated with the company, George Nelson, became managing director in 1930. During the 1930s the company became associated with the electrification of the Southern Railway of England's system, which gave it a strong position in the traction market.

English Electric made a substantial contribution to the British war effort during the Second World War. It took over, in 1942, Napiers the aero-engine company, and this helped establish the company's aircraft division. Company factories were also converted to build the Handley-Page Halifax heavy bomber. In the post-war era the company invested heavily in aircraft design, leading to major successes with the English Electric Lightning interceptor and English Electric Canberra tactical bomber .

As well as the company's traditional markets in heavy electrical engineering and railway traction business, the post-war era also brought a foray into domestic markets through the acquisition of the Marconi Company in 1946. Further important companies acquired in 1955 included Vulcan Foundry, Robert Stephenson & Co and Hawthorns Leslie , all with substantial railway engineering pedigrees. The company also manufactured Steam turbines.

The early 1960s saw the company rationalise its aircraft division under government pressure. This was to become part of the new British Aircraft Corporation. In 1960 English Electric attempted a takeover of one of the other major British electrical companies, GEC. This failed, but the rest of the decade was marked by a string of mergers in the industry; first of GEC with the AEI company in 1967, and then after a failed bid for EE by Plessey, the takeover of English Electric by the new GEC conglomerate.