Planned as the British Navy's fleet shore accommodation, construction of Terror Barracks was completed in 1939.

The barracks were commissioned as HMS Sultan II by the survivors of the ill-fated British warships, Prince of Wales and Repulse, that were sunk by Japanese Zero fighters off Kuantan in December 1941.

When the Japanese captured Singapore in February 1942, they occupied the camp. Following their defeat by the Allies, the Commander of the Japanese 10th Zone fleet surrendered to CPT H W Briggs of 11th Destroyer Flotilla in the Wardroom (Officers Mess) on 6 September 1945. The barracks returned to being HMS Sultan II before changing its name in 1946 to HMS Terror. The name was taken from one of the British Navy ships. There had been eight Terrors in the British Navy.

Fringed by the Straits of Johor, Terror Barracks was a natural setting for a naval school. When the British pulled out its troops at the end of 1971, theSchool of Maritime Training (now Institute of Naval Technology) moved in. The SAF Diving Centre (now Naval Diving Unit) took over the Far East Diving Training Centre. At the same time, Infantry Training Depot for BMT training used the barracks and named it Terror Camp. In 1972, the camp was renamed Sembawang Camp after its location. The Midshipman School was formed here in 1975 and the camp is now a Singapore Navy establishment.