221 Challenger tanks were deployed to Saudi Arabia for Operation Granby, the UK operation in the Persian Gulf War. In the original deployment, the 7th Armoured Brigade included two armoured regiments, the Queen's Royal Irish Hussars and the Royal Scots Dragoon Guards, both equipped with 57 of the latest Mark 3 version of the Challenger 1. They were modified for desert operations by a REME team and civilian contractors at the quayside in Al Jubayl, Saudi Arabia. This fit included additional Chobham Armour along the hull sides and explosive reactive armour (ERA) on the nose and front glacis plate. Modifications also included the provision of extra external fuel drums and a smoke generator.
There were major concerns about the reliability of the vehicle. In addition there were serious worries about how a tank designed to perform in temperate climates would stand the rigours of desert warfare. Before the commencement of the Gulf War deployment only 22% of Challenger 1's were operational because of faults and lack of spares.
On 22 November 1990, it was decided to add the 4th Mechanized Brigade to the force, under the umbrella of 1st (UK) Armoured Division. The new brigade had a single Challenger regiment, 14th/20th King's Hussars, equipped with 43 Challenger 1 tanks and reinforced by a squadron of the Life Guards. They were equipped with the Mark 2 version of the tank, which was upgraded by armouring the storage bins for the 120 mm charges as well as the additional armour fitted to the Mark 3's.
During Operation Desert Shield it was decided that the 1st (UK) Armoured Division would be placed under the command of the US VII Corps. This corps would form the armoured fist of the Coalition forces, tasked with destroying the bulk of the Iraqi forces. The forces of VII corps crossed the Saudi border into Iraq, and then crossed into Kuwait. The 1st (UK) Armoured Division was the easternmost unit in VII Corp’s sector, its Challenger tanks forming the spearhead of the advance. The division advanced nearly 350 km within 97 hours, destroying the Iraqi 46 Mechanised Brigade, 52 Armoured Brigade and elements of at least three infantry divisions belonging to the Iraqi 7th corps in a series of battles and engagements. They captured or destroyed about 200 tanks and a very large number of armoured personnel carriers, trucks, reconnaissance vehicles, etc.
The main threat to the Challenger was deemed to be the Iraqi Republican Guard's T-72M tanks; each British tank was provided with twelve L26A1 "Jericho" depleted uranium (DU) shells specifically for use against T72Ms, but during the course of the Coalition's ground campaign none was encountered as the division was withdrawn beforehand.
In action, the Global Positioning System (GPS) and Thermal Observation and Gunnery System (TOGS) fitted to the Challengers proved to be decisive, allowing attacks to be made at night, in poor visibility and through smoke screens. In total, British Challengers destroyed roughly 300 Iraqi tanks without suffering a single loss in combat. The Challenger, in comparison with the M1A1 Abrams tank deployed by the US Army, was more fuel efficient and achieved far greater serviceability. Brigadier Patrick Cordingley, the commander of 7th Armoured Brigade, said afterwards that "Challenger is a tank built for combat and not competitions."
A Challenger achieved the longest range confirmed kill of the war, destroying an Iraqi tank with a DU round fired over a distance of 5,100 metres (over 3 miles)—the longest tank-on-tank kill shot recorded.
Challengers were also used by the British Army in Bosnia and Herzegovina and Operation Joint Guardian, the NATO-led drive into Kosovo.