The division was formed in November 1937 on the initiative of General Sir Archibald Montgomery-Massingberd, the Chief of the Imperial General Staff (CIGS). At the time, it was named The Mobile Division. The choice of the division's General Officer Commanding reflected the tensions within the army. The Secretary of State for War (Leslie Hore-Belisha) wanted a Royal Tank Corps officer to command, as tanks would be the main force of the division, but Montgomery-Massingberd wanted a cavalry officer. Supporters of Montgomery-Massingberd proposed that the tank element of the division should be formed from cavalry regiments equipped with light tanks only, and that the tank brigade and its heavier tanks be removed from the division. The compromise was the appointment of Major-General Alan Brooke, who was from the Royal Artillery.[3] When Brooke was promoted, his replacement was a cavalry officer.
As formed, the Mobile Division was made up of the 1st and 2nd Light Armoured Brigades, the 1st Army Tank Brigade, artillery, engineers and signals. Its paper strength was 620 armoured fighting vehicles, but 7⁄8 of these were reconnaissance vehicles, and of those some were being simulated by trucks. The heavier tanks were in the tank brigade, and until cruiser tanks started deliveries in December 1938 they were obsolete Medium Tanks. At the same time, the organization of the division was changed to a Light Armoured Brigade (three regiments with light and cruiser tanks), a Heavy Armoured Brigade (three regiments of cruiser tanks) and a Support Group (motorized rifle battalion, motorized artillery regiment and a company of engineers). In practice, with insufficient cruiser tanks to equip the division, there was no difference in numbers and type of tanks between the light and heavy brigade