The demonstrator phase of the program began in 1988 when the US Department of Defense Strategic Defence Initiative placed a contract on the Electronics Division of Israel Aircraft Industries to build and test the Chetz-1 (Hebrew name for Arrow 1) Anti Tactical Ballistic Missile (ATBM) system. Following the successful completion of the demonstrator tests, the system entered full-scale development and production. The weight of the Arrow 1 was 2,000kg. A new missile was developed, the Arrow 2, with a launch weight of 1,300kg, which was first tested in 1995. Arrow 2 has successfully acquired, tracked and destroyed TM-91 Arrow missile targets from ranges of 60km and 100km. Further Arrow Weapon System developments have been planned and will be funded by Israel and the USA.

In February 2003, IAI signed an agreement with Boeing to establish the production infrastructure to manufacture components of the Arrow missile in the US. Boeing will be responsible for the production of approximately 50% of the missile components in the US. Boeing will produce various missile components and co-ordinate the production of existing Arrow missile components already being manufactured by more than 150 American companies. IAI will be responsible for integration and final assembly of the missile in Israel.

An Arrow Weapon System battery is equipped with typically four or eight launch trailers, each with six launch tubes and ready-to-fire missiles, a truck mounted Hazelnut Tree Launch Control Centre, a truck mounted communications centre, a trailer mounted Citron Tree fire control centre and the units of a mobile Green Pine radar system.

The Arrow 2 missile approaches the target at a maximum speed of Mach 9, or 2.5km/s, to a maximum altitude of 50,000 m.

Arrow II is intended to satisfy the Israeli requirement for an interceptor for defense of military assets and population centers and will support US technology base requirements for new advanced anti-tactical ballistic missile technologies that could be incorporated into the US theater missile defense systems. The Arrow missile, a joint international project with Israel, is a long-range interceptor that offers the United States technology infusion, including lethality data; development of optical window technology applicable to both THAAD and Navy Area Defense programs; data from stage separation at high velocities and dynamic pressures; and, interoperability development that will allow synergistic operations of Arrow with US TMD systems, if required in future contingencies. 

The Citron Tree battle management center, built by Tadiran, guides the Arrow 2 interceptor, developed by Israel Aircraft Industries' MLM Division. The entire anti-tactical ballistic missile project is called Homa.
 

The joint effort took a dramatic step forward during the summer of 1995 with the first test flight of the new “Arrow 2.” A year earlier, an experimental Arrow 1 missile intercepted and completely destroyed a target missile in Israel. Flight tests of the Arrow 2 are continuing. On September 14, 1998, a successful test was conducted. On November 1, 1999, a successful test of the Arrow was conducted by the Israeli Air Force and Israel deployed the first battery of Arrow missiles on March 14, 2000.

The system is designed to intercept as many as 14 incoming missiles. The first test of its ability to launch multiple missiles at different targets was conducted in January 2003. In seven interception tests, six have been successful. 

The system's development is jointly funded by the United States and Israel. Since 1988, the United States has provided Israel with more than $628 million in grants for research and development of the Arrow through the defense budget. When fully deployed, Israel will have paid for 60% of the program, which is ultimately expected to cost about $1 billion. 

Two Arrow batteries have been deployed, one at the Palmachim base to provide cover for Tel Aviv and another near the city of Hadera. A third battery is in development

The Arrow missile is launched before the threat missile's trajectory and intercept point are accurately known. As more trajectory data becomes available, the optimum intercept point is more precisely defined and the missile is guided towards the optimum intercept point.

The kill vehicle section of the missile, containing the warhead, fusing and the terminal seeker, is equipped with four aerodynamically controlled moving fins to give low altitude interception capability. The warhead is a high explosive directed blast fragmentation warhead developed by Rafael, which is capable of destroying a target within a 50m radius. The dual mode missile seeker has a passive infrared seeker for the acquisition and tracking of tactical ballistic missiles and an active radar seeker used to home on air breathing targets at low altitudes. The infrared seeker is an indium antimonide focal plane array developed by Raytheon (formerly Amber Engineering).

The intercept altitudes are from a minimum of 10km up to a maximum of 50km. The maximum intercept range is approx. 90km

    Large area of defense in a stand-alone mode.
    Highly lethal against various types of Theater Ballistic Missiles and warheads.
    Multi-TBM salvo interception.
    High and low altitude interception capability.
    Early-warning target. identification, launch and impact- point location capability.
    Modular, easily expandable baseline solution.
    Open architecture facilitating interoperability with other air defense systems.

Flexible & Adaptive 

    Open system architecture allowing interoperability with other air defense systems.
    Modular, easily expandable baseline solution.
    Flexible management of weapon system resources.
    Fully automatic, as well as "man-in-the loop" options for battle operations management.
    Transportable system elements.
 

The Arrow 2 system can detect and track incoming missiles as far way as 500 km and can intercept missiles 50-90 km away [some sources suggest the engagement range is 16 to 48km]. The Arrow 2 uses a terminally-guided interceptor warhead to destroy an incoming missile from its launch at an altitude of 10 to 40km at nine times the speed of sound. Since the missile does not need to directly hit the target--detonation within 40-50 meters is sufficient to disable an incoming warhead. The command and control system is designed to respond to as many as 14 simultaneous intercepts. 

The Elta Electronic Industries subsidiary of IAI Electronic Group developed the Green Pine early warning and fire control radar for the Arrow system. The radar carries the designation EL/M-2090 and includes the trailer mounted radar and antenna array, the power generator, a cooling system and a radar control centre.

Green Pine is an electronically scanned, solid state, phased array radar operating at L-band in the range 500MHz to 1,000MHz, and was developed from the Elta Music phased array radar. The radar operates in search, detection, tracking and missile guidance modes simultaneously.

The radar can detect targets at ranges up to about 500km and is able to track targets up to speeds over 3,000m/s. The radar illuminates the target and guides the Arrow missile to within 4m of the target.

The radar has the following features: 

The Green Pine radar's strategic value along the Indian-Pakistani border is reportedly inestimable. "It covers all of Pakistan's military command centers and bases between Islamabad, the capital, and the Indian frontier. The system reportedly provides India with surveillance of Pakistan's nuclear centers and missile sites

Launcher features: 

The LCC is located at the launch site and operates as an interface between the Fire Control Center (FCC) and launchers, receiving inputsfrom the FCC and activating the launchers. 

LCC's main features are: 

The fire control and battle management centre has computer workstations for the Sky Situation Co-ordinator, Intelligence Officer, Post Mission Analysis Officer, Resource Officer and Senior Engagement Officer as well as the Commander's station. The workstations display a large electronic map showing the area of battle. Predicted and confirmed launch sites are colour coded to show priority sites.

When a missile launch is detected, the launch site, the missile's position and trajectory and the predicted impact point are displayed on the electronic map. The predicted impact point is displayed as an ellipse on the map. The size of the impact ellipse shrinks as the missile's trajectory stabilises and the trajectory data becomes available. The trajectory image is colour matched to the image of its launch site. The optimum intercept point is also displayed. The centre can control up to 14 intercepts simultaneously.

Link 16, Tadil J, communications is being developed to allow interoperability with Patriot fire control units. Assigned targets can be handed over to the Patriot's N/MPQ fire control radar. Tests carried out by the US and Israel have successfully linked the Arrow and US Patriot and also the Arrow and Israeli Defence Force Patriot version.

FCCs main functions include:

Arrow 1 tests:

Test 1 (August 9th, 1990): Designed to test the control system the sensing devices that are being carried by the missile and guide it to its target during the launch. The test came to a halt seconds after take off and the missile was intentionally destroyed by an order from the ground due to fear it might ward off and hit a settlement. Cause of malfunction: the ground tracking radars were not successful at tracking the missiles' flight.

Test 2 (March 25th, 1991): Designed to test the missile's system during launch. The test was conducted on a ship at sea. Malfunction in the missile resulted in the abortion of the experiment.

Test 3 (October 31st, 1991): Designed to test the Arrow's interception ability. The missile was launched from a ship at sea as well, however, the same causes for the previous tests' abortion reappeared, resulting in the abortion of this test as well.

Test 4 (September 23rd, 1992): Designed to test the missile's system during launch. The systems operated as plan and the Arrow reached it's designated point in the sky. The missile was destroyed, as planned, 45 seconds later. This successful experiment ended the system's preliminary testing phase.

Test 5 (February 28th, 1993): Designed to test the missile's interception abilities. The Arrow managed to pass by very closely to the target missile. For the first time, the Arrow's ability to intercept Surface-to-Surface missiles was proven.

Test 6 (July 14th, 1993): Designed to test the missile's interception abilities. The Arrow managed to pass by very closely to the target missile.

Test 7 (October 14th, 1993): Designed for system examination. The Arrow managed to pass by very closely to the target missile.

Test 8 (March 1st, 1994): The missile was not launched due to ground computer failure.

Test 9 (June 12, 1994): The missile was launched against a target missile and successfully intercepted it.

Arrow 2 tests:

Test 1 (July 30th, 1995): Designed to test the steering, control and cruising systems of the Arrow. The test was conducted without a target missile.

Test 2 (February 20th, 1996): Another successful experiment. This time a target missile had not been launched as well.

Test 3 (August 20th, 1996): Successful interception. The Arrow successfully destroyed the target missile.

Test 4: (March 11th, 1997): Another successful interception. The Arrow destroyed the target missile this time as well.

Test 5 (August 20th, 1997): The missile was destroyed by ground orders due to malfunction in the missile's steering system.

Test 6 (September 14th, 1998): The missile was launched towards a virtual target created by a simulator. The test was successful.

Test 7 (November 1st, 1999): Full systems test. The missile was launched towards a virtual Scud target and successfully managed to hit and destroy it.

Test 8 (September 14th, 2000): The Arrow was launched towards the target missile Black Sparrow launched from an F-15 fighter jet simulating a Scud. The Arrow hit and destroyed the target.

Test 9 (August 28th, 2001): Full systems test wherein the Arrow was launched towards a Black Sparrow target missile, simulating a ballistic missile flight. The interception was conducted at a range larger than 100 kilometers at higher altitudes than before. The Arrow hit its target and destroyed it.

Test 10 (January 5th, 2003): Full systems test that did not include interception. Four missiles were launched towards four simulation targets in order to examine the interceptor's performance on special flight conditions and the system's ability at a sequence of launches.

Test 11 (December 16th, 2003): An test that examined the improved systems added as a result of a contract with the US, enabling the Arrow to intercept at a high ceiling.

Over the following years more tests are expected aimed to examine the missile's efficiency and to test for possible malfunctions.