The C-40B was built for the U.S. Air Force as a military version of the Boeing 737-700 Boeing Business Jet. The aircraft was created to replace the aging fleet of the C-137 aircraft for U.S. combatant commanders and other government leaders. The Air Force awarded the medium lift contract in August 2000. The 89th Airlift Wing acquired its first C-40B aircraft in December 2002. The aircraft is based in Andrews Air Force Base, Maryland. The 15th Airlift Wing, Hickam AFB, Hawaii acquired its C-40B for U.S. Pacific Command in February 2003.

The C-40B is created to be an "office in the sky" for senior military and government officials. The C-40Bs are equipped with the Connexion by Boeing system, providing secure in-flight broadband connectivity -- data/video transmit and receive capability -- to enhance communications, productivity and security. This gives U.S. military officials the ability to conduct business anywhere around the world by using on-board Internet and local area network connections, telephones, satellites, television monitors, facsimile and copy machines. The C-40B has a computer-based passenger data system.