Dasher started out as the merchantman Rio de Janeiro built by Sun Shipbuilding (Maritime Commission contract (Hull Sun-62)). She was laid down on 14 March 1940, launched on 12 April 1941 and acquired by the United States Navy on 20 May 1941 as AVG-5 (also known as BAVG-5). She was converted at Tietjen & Lang, transferred to the Royal Navy and finally commissioned into RN service as HMS Dasher (D37) on 2 July 1942.
She participated in Operation Torch, with her sister HMS Biter, carrying Sea Hurricanes (naval variant of the Hawker Hurricane) of 835 Naval Air Squadron which were effective against Vichy French Dewoitine D.520 fighter aircraft.
After doing some aircraft ferry operations in the Mediterranean, Dasher sailed to the Clyde in March 1943 and, having had her flight-deck lengthened by 42 feet, she embarked Fairey Swordfish aircraft.
She escorted one convoy successfully, but shortly after leaving with the second, Dasher suffered engine trouble and turned back. Shortly after getting to the Firth of Clyde on 27 March, 1943, she suffered a major internal explosion and sank.
Various possible causes have been suggested, including one of her aircraft crashing onto the flight deck and igniting petrol fumes from leaking tanks. Much of what happened will never be known, because of an official cover-up aimed at concealing what was the largest loss of life not in the face of the enemy of the war. Her death toll, 379 out of 528 crewmen, despite rapid response and assistance from ships and rescue craft from Brodick and Lamlash on the Isle of Arran and from Ardrossan and Greenock on the Scottish mainland, was amongst the highest in British home waters. Many escaped the ship but died of hypothermia or burns suffered when escaped fuel ignited on the water. Most of the dead were buried at Ardrossan or Greenock.
The government of the time, eager to avoid damage to morale and anxious to avoid any suggestion of faulty US construction, tried to cover up the sinking. The local media were ordered to make no reference to the tragedy, and the authorities ordered the dead to be buried in a mass unmarked grave. Furious relatives protested and some of the dead were returned to their loved ones for burial. The survivors were ordered not to talk about what happened. This policy subsequently attracted much criticism, and now memorials to those lost exist at both Ardrossan and Brodick. The wreck site lies approximately halfway on the Caledonian MacBrayne ferry route between Ardrossan and Brodick and is a controlled site under the Protection of Military Remains Act.
Teak boards from the flightdeck of HMS Dasher washed up on the beach at Ardrossan in 1999. They were riddled with tubes made by burrowing teredo worms. A section of this wood featured in the "Flotsam and Jetsam" exhibition in the Millennium Dome and another piece is held by the North Ayrshire Museum in Saltcoats.
There has been speculation that one corpse from the sinking was used during the British deception operation, Operation Mincemeat. The case is argued by authors John and Noreen Steele in their book, The Secrets of HMS "Dasher".