The Challenger was built by the Royal Ordnance Factories (ROF). In 1986 ROF Leeds (and the Challenger production line) was acquired by Vickers Defence Systems (later Alvis Vickers). The Challenger design by the former Military Vehicles and Engineering Establishment (MVEE) near Chobham in Surrey originated in an Iranian order for an improved version of the stalwart Chieftain line of tanks in service around the world. These were the Chieftain Mk5(P)- FV4030/1, FV4030/2 Shir (Lion)1 and 4030/3 Shir 2. With the fall of the Shah of Iran and the collapse of the UK MBT80 project, the British Army became the customer and the tank was further developed by MVEE to meet Western European requirements. For a short time the tank was named "Cheviot" before becoming "Challenger", a name reused from a cruisertank of the Second World War.
The most revolutionary aspect of the Challenger 1 design was its Chobham armour which gave protection far superior to any monolithic Rolled Homogeneous Armour (RHA), which was the then standard of tank armour material. This armour has been adopted by others, most notably the American M1 Abrams. Additionally the Hydrogas suspension fitted provided outstanding cross-country performance through the long suspension arm travel and controlled bump and rebound behaviour offered.
Challenger 1 competed in the Canadian Army Trophy Competition in 1987. It scored more direct hits than its competitors, but the poor fire control system and sights caused it to be the slowest firer, and it was placed last in the league tables.
A requirement for a new MBT was issued. Proposals put forward for the new specification included an improved Challenger from Vickers, the American M1 Abrams, the French Leclerc, and the German Leopard 2.
The Vickers Defence Systems design, designated Challenger 2, was eventually selected. This tank was significantly more capable than its predecessor, based on the same basic MVEE-designed hull but with a new turret based on the Vickers Private Venture Mk7 design and improved Chobham armour.There was also a Challenger Marksman SPAAG version, equipped with the Marksman turret".