The 1939 problem
Chain Home could see bombers coming. It couldn't tell whether the bombers were RAF returning from a raid or Luftwaffe arriving for one. Within months of Chain Home going operational, RAF Spitfires were shooting down RAF Hurricanes by accident. The first IFF transponder — a simple radio that broadcast a recognisable pulse when triggered by friendly radar — went into service in 1940.
Modes 1 through 5
Modern military IFF supports several modes. Mode 1 (mission code), Mode 2 (aircraft ID), Mode 3/A (civilian-compatible squawk), Mode C (altitude), Mode 4 (cryptographic challenge-response, Cold War era), Mode 5 (modern encrypted, NATO standard since 2014). Mode 5 uses time-of-day-synchronised cryptographic challenges that can't be replayed.
Civilian SSR — your airliner's transponder
Air traffic control uses the same architecture under the name Secondary Surveillance Radar. The transponder in every airliner replies to ATC with a four-digit squawk code (1200 = VFR, 7500 = hijack, 7600 = radio failure, 7700 = emergency). ADS-B is the modern replacement, broadcasting position and identity automatically twice a second.
Why IFF still goes wrong
Friendly fire incidents — 1988 USS Vincennes shooting down Iran Air 655, 1994 US fighters shooting down two US Black Hawks over Iraq — usually trace to IFF failures: dead transponder, wrong code, jammed reply, or operator skipping the procedure under stress. IFF reduces but does not eliminate the problem.