The prototype CW-21 was delivered to China for evaluation by the Chinese Air Force. The Chinese were impressed by the CW-21's performance, and negotiation started on a Chinese purchase. While these negotiations were ongoing, the CW-21 prototype was flown in combat against Japanese bombers attacking Chungking, with Curtiss test pilot Bob Fausel claiming a Fiat BR.20 bomber shot down on 4 April 1939. In May 1939, a contract was signed, with China receiving the prototype and three complete examples built by Curtiss, as well as kits for 27 more aircraft. Assembly would be undertaken by the Central Aircraft Manufacturing Company (CAMCO) at Loiwing, near the China-Burma border. These were to be armed with two .50 in (12.7 mm) and two .30 in (7.62 mm) machine guns.
The three Curtiss-built aircraft were shipped to China in May 1940 and were eventually handed over to the 1st American Volunteer Group (Flying Tigers), who intended to use them to tackle high-flying Japanese reconnaissance aircraft. These crashed and were destroyed, due to poor visibility, on a flight from Rangoon to Kunming on 23 December 1941. Of the 27 to be assembled by CAMCO, none were completed before CAMCO was forced by advancing Japanese forces to evacuate its Loiwing factory to India in 1942.
Curtiss had meanwhile developed an improved version of the CW-21, the CW-21B. The main difference was a new undercarriage with inward-retracting mainwheels and a semi-retractable tail wheel which had been developed for the Curtiss-Wright CW-23 armed trainer, with other changes including hydraulically operated flaps. Although heavier, the CW-21B was 18 mph (29 km/h) faster than the original CW-21, albeit with a reduced rate of climb.
In April 1940, the Dutch Army Aviation Brigade Luchtvaartbrigade, desperate for modern combat aircraft, placed an order for 24 CW-21Bs from Curtiss-Wright. After the Battle of the Netherlands, which resulted in the Dutch Army surrendering to the invading Germans on 15 May 1940, the order for the CW-21Bs (together with a number of Curtiss Model 75 fighters and Curtiss-Wright CW-22 trainers), was transferred to the government of the Dutch East Indies (now Indonesia), for the Militaire Luchtvaart van het Koninklijk Nederlands-Indisch Leger ("Military Aviation of the Royal Netherlands East Indies Army"; ML-KNIL).
The 24 CW-21Bs were assembled at Andir airfield, Bandung, Java in February 1941, equipping Vliegtuiggroep IV, Afdeling 2 ("Air Group IV, No. 2 Squadron"; 2-VLG IV). The lightweight construction of the Curtiss-Wrights gave rise to structural problems, and several aircraft were grounded by cracks in the undercarriage, and were still awaiting repair when war with Japan began on 8 December 1941.
With its light construction, radial engine, low wing loading, limited pilot protection and lack of self-sealing fuel tanks, the CW-21B was the Allied fighter most similar to the opposing Japanese fighters. It had a rate of climb superior to the Nakajima Ki-43-I ("Oscar") and Mitsubishi A6M2 Zero. The CW-21B had similar firepower to the "Oscar", but worse than the cannon-armed Zero. 2-VLG IV claimed four aerial victories during the Netherlands East Indies campaign, but the ML-KNIL was overwhelmed by the sheer number of Japanese aircraft; almost all of its fighters were soon lost in combat or destroyed on the ground.