Staff Writer (Updated: 4/10/2015):
The original Predator UAV had been in service since 1995 and was predominantly developed as an unarmed reconnaissance-gathering platform. By the time the invasions of Afghanistan and Iraq had evolved to open wars, there naturally grew a need for armed UAVs to patrol the skies and expand upon the types tactical role. Tests of weaponized Predators were conducted as early as 2001 with general success. General Atomics then introduced the more powerful MQ-9 "Reaper" ("Predator B") as a private venture and this version was formally accepted and introduced into the American military inventory in 2007 - becoming the first UAV in service with "hunter-killer" capabilities. The new breed saw an increase to engine power, structural dimensions and ordnance-carrying capabilities which resulted in a broader mission scope. These systems could also utilize the same ground control facilities as the "Predator A" so it made them somewhat economical purchases.
General Atomics then followed the Predator line with the MQ-1C "Warrior" in response to the US Army's ERMP ("Extended Range Multi-Purpose") UAV competition. The competition was developed to replace the outgoing IAI RQ-5 Hunter UAV series. First flight of the Warrior was recorded in October of 2004 and flight testing began in the Spring of 2008. The first missile launch was recorded on February 23rd, 2009. Formal introduction into the US Army inventory was in 2009 and the MQ-1C has maintained active service since January 2010, first in Iraq and then in Afghanistan. Since then, the Warrior - which was also known as "Sky Warrior" - was renamed as "Gray Eagle" by the US DoD on August 19th, 2010.
The MQ-1C was born out of the US Army's 2002 ERMP UAV program seeking a UAV platform with improved loiter times and a replacement for the outgoing IAI RQ-5 Hunter UAV series. General Atomics, already having garnered the required experience with their Predator UAV family line, submitted a revised form in their "Sky Warrior" product. Similarly, a revised version of the IAI (Israeli Aircraft Industries) RQ-5 Hunter UAV was also considered during the evaluation. The General Atomics product was selected as the winner and assigned the designation of "MQ-1C". A contract was drawn up for further development at a taxpayer cost of approximately $214 million dollars with the full program cost expecting to reach $1 billion dollars.
Of note - the MQ-1C Gray Eagle is not the "Predator C" of the Predator family line. This title is given instead to the General Atomics "Avenger" which is in currently in development (2012) and sports a turbofan engine within a drastically revised "stealthy" airframe. The Avenger is also developed from the MQ-9 Reaper while the Gray Eagle can be thought of as an improved "Predator A" and directly descended from the original.
Between 2009 and 2010, the US Army conducted various tests involving the Gray Eagle and the Hellfire missile. In a 2009 test, the UAV achieved a 90% success rate when ten such missiles were fired at various targets. The sole miss was against a moving target located under the aircraft. In a 2010 test, the Gray Eagle launched eight missiles and achieve direct hits with each one. Six of these were "self-designated" by the Gray Eagle's onboard designator while the remaining pair were laser designated by accompanying AH-64 Apache attack helicopters. Gray Eagles, in early armed forms, were delivered to operational units in Iraq (June 2010) and Afghanistan (late 2010).