Ferranti Defence Systems Ltd was a division of the Ferranti Scottish Group, created in 1985 when Ferranti Ltd restructured the Scottish Group. A second division was also created, Ferranti Industrial Electronics Ltd.

Ferranti Ltd created the Scottish Group in 1943 with the establishment of the Crewe Toll site for the production of Gyro gunsights for use in Lancaster, Spitfire and Hurricane aircraft during the Second World War. The factory at Crewe Toll expanded after the war, adding electronics manufacture in 1947 and building a new laboratory block at Silverknowes, about a mile from Crew Toll, in 1961. The Scottish Group established a third factory at Robertson Avenue, Edinburgh, in 1967. The military systems developed by the Scottish Group were tested at the Flying Unit based at Turnhouse Airport.

John Norman Toothill and Donald Murdo McCallum, both directors at Ferranti Ltd, were the first managers of the Scottish Group. The two men were important figures in the development of Scotland’s electronics industry. John Toothill became Chairman of the Research Committee of the Scottish Council for Development and Industry as well as publishing a report on the Scottish Economy. Donald Murdo McCallum, known as “Supermac” to Ferranti employees, held other senior appointments outside of the company, including acting as Chairman of the Scottish Committee of the Scottish Tertiary Education Advisory Council and Deputy Lieutenant of Edinburgh.

Ferranti Defence Systems Ltd was sold to GEC Marconi and became GEC Ferranti Defence Systems Ltd in 1990.