The project, funded by Boeing, to produce the Boeing Model 248 began in September 1931, with the Army Air Corps supplying the engines and the instruments. The design, which included an open cockpit, fixed landing gear and externally braced wings, was the last such design procured by the USAAC as a fighter aircraft. The Model 248 had a high landing speed, which caused a number of accidents. To remedy this, flaps were fitted to reduce the landing speed. The Army Air Corps ordered three prototypes, designated XP-936, with the first flight on 20 March 1932.
The Boeing XP-936 was still tricky to land; sometimes, because of the short nose, it tended to roll onto its back and would flip forward, injuring a number of pilots. The prototype's unarmored headrest offered virtually no protection in such instances. As a result, production Model 266s ("P-26A"s) had a taller, armored headrest installed.
The diminutive "Peashooter", as it became affectionately known by service pilots, was faster than previous American combat aircraft. Nonetheless, due to the rapid progress in aviation design in the 1930s, its design was to quickly become an anachronism, with its wire-braced wings, fixed landing gear and open cockpit representing outdated design features. The Curtiss P-36, Messerschmitt Bf 109 and Hawker Hurricane, with enclosed cockpits, retractable landing gear and monocoque wings, all flew for the first time in 1935, just three years later than the P-26. However, the P-26 was easy to fly, and it remained in service until the U.S. entered World War II.
Formation of nine Boeing P-26s of the 20th Pursuit Group.
Deliveries to USAAC pursuit squadrons began in December 1933 with the last production aircraft in the series coming off the assembly line in 1936, designated the P-26C. Ultimately, 22 squadrons flew the Peashooter, with peak service being six squadrons in 1936. P-26s were the front line fighters of the USAAC until 1938, when Seversky P-35s and Curtiss P-36s began to replace the P-26. A total of 20 P-26s were lost in accidents between 1934 and the start of World War II, but only five before 1940.
The first Boeing P-26 to experience major combat operation was the Chinese Model 281. On 15 August 1937, eight P-26/281s from the Chinese Nationalist Air Force 3rd Pursuit Group, 17th Squadron, based at Chuyung airfield, engaged eight out of 20 Mitsubishi G3MNellmedium bombers from the Kisarazu Air Group sent to attack Nanking. The Chinese Boeing fighters helped shoot down two of the four Japanese bombers destroyed that day without suffering any losses. Subsequent engagements between the Chinese Peashooter pilots and pilots of the Imperial Japanese Navy flying the Mitsubishi A5M "Claudes" were the first aerial dogfights and kills between all-metal monoplane fighter aircraft. A single P-26 was in service with the Spanish Republican Air Force during the Spanish Civil War of 1936–1939, but no aerial kills were recorded with this fighter aircraft. It was shot down in 1936.
By December 1941, U.S. fighter strength in the Philippines included 28 P-26s, 12 of which were operational with the 6th Pursuit Squadron of the Philippine Army Air Corps. Filipino-flown P-26s claimed one G3M and two or three Mitsubishi A6M2 Zeros before the last of the P-26s were burned by their crews on 24 December 1941.
Only nine P-26s remained airworthy, serving in the Panama Canal Zone. In 1942–43, the Fuerza Aérea de Guatemala acquired seven P-26s ostensibly by the U.S. government smuggling them in as "Boeing PT-26A" trainers to get around restrictions of sales to Latin American countries. The last two P-26s in service were still flying with Guatemala's Air Force until 1956, when they were replaced with P-51 Mustangs. The P-26's last combat operation was with the Guatemalan Air Force during a coup in 1954.
P-26A c/n 1899 33-123 is currently on display by the Planes of Fame Museum located in Chino, California. This aircraft was sold to the Guatemalan Air Force on 11 May 1943, and it flew as FAG 0672 until it was retired in 1957 when it was recovered by Ed Maloney. Once flown regularly with the registration N3378G, the museum's P-26 was placed on static display in the mid-1980s to protect it. In 2004, the decision was made to again fly the P-26, and a restoration was begun to return the P-26 to flying condition. This was completed in spring 2006, with the aircraft making its first appearances during the museum's air show in May 2006.
P-26A (reproduction) is on display at the National Museum of the United States Air Force in Dayton, Ohio. It is painted as the commander's aircraft of the 19th PS / 18th PG, stationed at Wheeler Field, Oahu, in 1938. The San Diego Air and Space Museum is making a reproduction of an early model to Boeing's plans with the original design's "streamlined tailwheel" and without flaps and the crossover exhaust that were later additions. In addition, Mayocraft Inc., completed the final assembly in September 2006, and it has now begun taxi testing a nearly-100 percent scale tribute to the Boeing P-26.
P-26C: two aircraft are being rebuilt by Golden Age Aeroplane Works, Seymour, Indiana.
P-26D: A flying replica completed in 2006 is in the collection of the Military Aviation Museum, Virginia Beach, Virginia. 
^The P-26 continued the pursuit fighter concept that had been first employed in World War I. The P=Pursuit designation originally coined by the British referred to a fighter aircraft dedicated to speed and interception.