The Dominion Police, with its developing security intelligence function, was amalgamated with the 2,500 members of the Royal North West Mounted Police in 1920 to form the Royal Canadian Mounted Police (RCMP). Between the two world wars, the security intelligence function remained small and inconspicuous. At headquarters in 1939, it employed three members and two stenographers, with field units in the larger cities investigating threats such as the fascist movement. The espionage activity related to the Second World War, and the subsequent defection of Soviet cypher clerk Igor Gouzenko in September 1945, removed any thoughts the government might have had about reducing the security intelligence function to pre-war levels.

Gouzenko's revelations of elaborate Soviet espionage networks operating in Canada ushered in the modern era of Canadian security intelligence. Previously, the "communist menace" had been viewed by authorities in terms of its threat to the labour movement. Gouzenko's information showed that the Soviets of the day were interested in more than cultivating disaffected workers: they were intent on acquiring military, scientific, and technological information by whatever means available to them. Such knowledge had become the key to advancement, and the Soviets intended to progress. Thus, as the post-war period gave way to the Cold War, Canadian security intelligence operations grew in response to this new threat.