In 1778, when the War of Independence broke out, no heavy cavalry corps were sent to North America; but the establishment of the Greys was increased by some 250 men and horses, and 48 of these were equipped as Light Dragoons. The "light" part of the Regiment now consisted of 6 sergeants, 6 corporals, and 84 private men; and in April, 1779, these light horsemen were incorporated, with detachments from the 7th, 15th and 16th Dragoons, into a Regiment which was numbered 21st Dragoons. During the summer of 1779 the Greys were encamped on Salisbury Plain, and other Dragoon Regiments with them. In November the Regiment went into quarters at Marlborough, Chippenham, Colne, and Malmesbury.
In the autumn of 1780 they marched into Worcestershire.
In January, 1781, two troops requisitioned by magistrates on account of disturbances, marched to Ludlow. In June the Regiment marched into Dorsetshire.
In 1782 the Regiment was at Durham, and in 1783 went north to Scotland. In this year, peace having been made with the United States of America, the Regiment's establishment was reduced to 232 all told.
In 1784 they marched south, and were stationed 11 months in Manchester.
In the summer of 1786 they occupied extensive cantonments in Dorsetshire, and early in 1787 four troops were called in to aid the civil power in Wiltshire. In June the Regiment marched into quarters in Hampshire.
In April, 1788, they were in quarters near Hounslow, and thence went to Ipswich, removing in the summer of 1789 to Nottinghamshire and Lincolnshire. Early in 1790 the Regiment marched into Yorkshire; from there 3 troops were soon sent to Newcastle-on-Tyne, and in September the other 3 troops marched to Durham. In the spring of 1791 they marched to Scotland, returning in the spring of 1792, and quartering in Lancashire. In December, 1792, an increase of 60 men was ordered.
The French Revolution having broken out, the Regiment was, in 1793, made up to 9 troops of 54 non-commissioned officers and men each; and soon 4 troops were ordered to be held perfectly ready for foreign service.
On January 20th, 1793, Louis the Sixteenth was murdered. The French envoy was at once ordered to leave England, and on February the 3rd the Convention declared war against England. The French attacked Holland, and a united British and Hanoverian force, commanded by the Duke of York, went to the help of the Dutch.