Station HYPO was first established in 1928 at Little Wailupe on the southeastern shore of Oahu. The intercept site was built into a small, cramped storeroom. Even though it was the farthest U.S. Navy intercept station from Japan, it enjoyed good intercept conditions for the Japanese Imperial Navy (IJN) during the nighttime hours. In 1935, the intercept station was outgrowing its space, and after the high-power transmitting station located at Heeia moved to the Navy Yard on Pearl Harbor, Station HYPO moved into the vacated spaces. Chief Petty Officers Harry “Pappy” Kidder, Truett “Tru” Lusk, and Charles “Dan” Daniels supervised the move. Heeia was on the northeastern shore of Oahu, in Kaneohe Bay, and provided significant operational and comfort upgrades for Station HYPO.

However, as OP-20G increased Radio Intelligence operations around the Pacific, Station HYPO once again outgrew its spaces and was moved to Wahiawa, near Schofield Barracks, a large Army post on the plateau in the west central part of the island.

Station HYPO played an instrumental role during World War II, intercepting IJN radio communications and relaying them to the Combat Intelligence Unit (CIU) at Pearl Harbor, where Joseph Rochefort's men performed cryptanalysis and traffic analysis.

Station HYPO was the first intercept station that was named out of alphabetical order. After the phonetic letters ABLE, BAKER, and CAST were used for the first three intercept sites, HYPO was used for the intercept site in Hawaii. HYPO, H, for Hawaii. A common, and now widely held, misconception is that the Joseph Rochefort's CIU in the "dungeon" of the 14th Naval District Administration Building was called Station HYPO. Despite this widely held belief, Station HYPO actually always referred to the intercept site, which was never located at Pearl Harbor.