The Ba.65 debuted during the Spanish Civil War. Thirteen Series I aircraft, powered by the Gnôme-Rhône engine, equipped the 65a Squadriglia of the Aviazione Legionaria (Legionary Air Force). The unit took part in operations at Santander in August 1937, then at the Battles of Teruel and the Ebro. It proved effective and was compared positively with the German Junkers Ju 87 Stuka. In a unique engagement, on 24 July 1936, one of the Legionary Air Force pilots scored an air-to-air victory when he encountered a lone twin-engine Tupolev SB-2 bomber over Soria and shot it down. Of the 23 Ba.65s sent to Spain, 12 had been lost in the course of the civil war. The Ba.65s flew 1,921 sorties, including 368 ground-strafing and 59 dive bombing attacks. When the Aviazione Legionaria returned to Italy in May 1939, they bequeathed their 11 surviving Ba.65s to the Spanish Air Force.
A total of 25 Fiat-powered Ba.65s two-seaters were sold to the Kingdom of Iraq in 1938. These consisted of 22 equipped with Breda L turrets and two dual control trainers. From 2–31 May 1941, the Royal Iraqi Air Force flew the Ba.65 during the Anglo-Iraqi War. War broke out after an Iraqi coup d'état installed a new government while maintaining the existing monarchy. The Ba.65 was used against armed forces of the United Kingdom and the Commonwealth of Nations which the coup leaders were trying to expel from bases established after Iraq's independence under the Anglo-Iraqi Treaty of 1930 from the Nazis.
During World War II, the Ba.65 was employed against the British in North Africa. When Italy entered the war in June 1940 about 150 aircraft were reported to be still in service, albeit suffering heavy losses facing the British fighters. Most were either out of service or shot down by February 1941. The aircraft, which had been forcibly kept in service after the failure of the Ba.88 and the poor performances shown by the Caproni Ca.310, was replaced by modified Savoia-Marchetti S.79s or fighters in the dive bomber role.
Chile bought 20 Ba.65 (17 single-seaters and three dual control trainers) powered by the Piaggio P.XI C.40 (also a 14K derivative), late in 1938. Portugal purchased 10 Breda equipped with Fiat engines and Breda L Turrets, in November 1939.