In the early 1930s, the Navy supported Wright development of two new liquid-cooled engines, the XR-2120 (H-2120) and the V-1800. This was part of a "high-speed development program" undertaken by the Navy because of concern over the growing superiority of foreign airplanes in top speed, especially as demonstrated in the 1929 Schneider Trophy contest and again in 1931.

First of the two engines and derived from the Curtiss H-1640, it was anticipated that the XR-2120 design, with liquid cooling and enlarged cylinders, would make a good racing engine. The small diameter of the engine, considered important for drag reduction, proved to be difficult to develop due to excessive angularity of the connecting rods and other problems. The Navy withdrew support from the project, primarily because it decided to focus on the development of air-cooled engines. Convinced that the design was mechanically poor, Wright made little effort to persuade the Navy to change its decision and dropped the project.