Demolition debuted in the World Wrestling Federation (WWF) as a heel tag team originally consisting of Ax and the original Smash (Moondog Rex) on January 4, 1987, alongside manager Luscious Johnny V, defeating the team of The Islanders and later participating in a battle royal won by Pete Doherty. Demolition wore studded black leather outfits and leather-covered hockey masks to the ring, which they removed to reveal face paint usually made up of some combination of black, white, red, or silver colors, though other colors were sometimes included.
After only a few matches, Moondog Rex was replaced as Smash by Barry Darsow in a match aired on the February 14, 1987 edition of Superstars. On the March 14 Saturday Night's Main Event X, Demolition participated in another battle royal, won by Hercules Hernandez. Around that same period, Johnny Valiant (who went on to manage the "New Dream Team" of Greg Valentine and Dino Bravo before leaving the WWF at the end of 1987) sold their contracts to Mr. Fuji, who became their manager.
Demolition became known for their aggressive style in the ring and the way that they dominated their matches. Their first feud was with the team of Ken Patera and Billy Jack Haynes, which started after Ax and Smash brutalized WWF jobber Brady Boone (billed in storyline as the cousin of Haynes), during a televised match and then battered first Haynes and then Patera when they each tried to come to the rescue. Demolition claimed victories over all of the established face tag teams in the WWF at the time, including The Killer Bees (Jim Brunzell and B. Brian Blair), The Rougeau Brothers (Jacques and Raymond), The British Bulldogs (Dynamite Kid and Davey Boy Smith), The Young Stallions (Paul Roma and Jim Powers), The Islanders (Haku and Tama), and The Can-Am Connection (Rick Martel and Tom Zenk).
Demolition made their pay-per-view debut at Survivor Series in an elimination tag team match where five teams faced five teams; Demolition was part of the heel group. They were disqualified for shoving down referee Dave Hebner during the match and the face team went on to win the match.
At WrestleMania IV, Ax and Smash defeated Strike Force (Rick Martel and Tito Santana) to win their first WWF World Tag Team Championship. Ax struck Martel in the back of the neck with Fuji's cane while he had Smash in a Boston crab (Fuji had dropped the cane into the ring while taking a beating from Santana who carried on oblivious to what was happening in the ring). Martel was knocked out and Smash covered him for the pin while Ax hid outside with the cane. As champions, they defeated a number of the top teams of the WWF, which at the time had a very talent-rich and hotly contested tag division, most notably the British Bulldogs and the Hart Foundation (Bret Hart and Jim Neidhart). The Demolition-Strike Force feud ended in July after Martel took a leave of absence from the WWF; to explain, Martel took a Demolition Decapitation on the floor and suffered a kayfabe injury.
In the summer of 1988, The Powers of Pain (The Warlord and The Barbarian) entered the WWF and challenged them for the Tag Team Championship. During the elimination tag team match at the 1988 Survivor Series, Mr. Fuji attacked Demolition and joined forces with the Powers of Pain. A double turn took place as Demolition turned face while the Powers of Pain turned heel. Interviewed after the contest, Fuji claimed that he had turned on Demolition because, since winning the championship, they had become insubordinate and disrespectful towards him, whereas the Powers would be utterly obedient and loyal apprentices. For their part, Demolition denounced their former manager as a parasite, labelling him "Fuj the Stooge." Ax and Smash also memorably squared off against each other as entrants number one and two in the Royal Rumble match in 1989, tearing into each other for the full two minutes before being joined in the ring by the third entrant André the Giant, where they once again joined as Demolition and targeted the big man.
Demolition defeated the Powers of Pain and Mr. Fuji in a tag team handicap match at WrestleMania V to retain the WWF World Tag Team Championship when they caught Fuji in the "Demolition Decapitation". That day, Demolition became the longest reigning WWF World Tag Team Champions after breaking the previous 370 day record of The Valiant Brothers (Jimmy and Johnny). They would eventually last a reign of 478 days, and while the general record for any tag team championship has since been broken (by The New Day in 2016), this still stands as the specific record for the "classic" World Tag Team Titles.
After WrestleMania V, Demolition started a feud with The Twin Towers (Akeem and The Big Boss Man) and then a feud with The Brain Busters (Arn Anderson and Tully Blanchard), who were managed by Bobby "The Brain" Heenan. On the May 27, 1989 Saturday Night's Main Event XXI, the Brain Busters defeated Demolition by disqualification. They finally dropped the titles to the Brain Busters in a two-out-of-three falls match on the July 29 Saturday Night's Main Event XXII following outside interference from André the Giant with a chair. As well as looking to regain the belts, Demolition sought revenge on André and closure on The Twin Towers. At SummerSlam 1989, King Duggan and Demolition defeated André and the Towers in a six-man tag team match (already advertised prior to the title change) where Smash showcased his strength by body slamming both of the Twin Towers. Demolition focused on regaining the tag titles and restarted their feud with the Brain Busters. On the November 4 edition of Superstars (taped on October 2), Demolition defeated the Brain Busters to regain their tag titles and win their second WWF Tag Team Championship.
Demolition next feuded with the new Heenan Family team, The Colossal Connection (André the Giant and Haku). On the December 30 edition of Superstars (taped on December 13), Demolition lost the tag titles to the Colossal Connection. At WrestleMania VI, Demolition defeated the Colossal Connection to regain the titles and win their third and final WWF World Tag Team Championship, and finally put an end to their feud with the Heenan Family. Due to his deteriorating physical condition, André never tagged in during the match, with Haku facing Demolition on his own.
After WrestleMania VI, Demolition quietly turned heel for the first time since 1988. This intensified when a new member was added to the team, Crush. Crush soon took a more active role, teaming with Smash while Ax faded into the background, becoming more of a manager. At this time, Demolition used the "Freebird rule" to allow any two members to wrestle the matches. Smash and Crush defended the titles in the summer of 1990. On the July 28 Saturday Night's Main Event XXVII, Smash and Crush defeated The Rockers (Shawn Michaels and Marty Jannetty) to retain the titles after Ax interfered on their behalf and attacked Michaels. The next month at SummerSlam 1990, however, Demolition lost the titles to the Hart Foundation in a two-out-of-three falls match. In that match, Smash and Crush started, but Ax secretly came down later on to substitute himself into the match behind the referee's back. Ultimately, the Legion of Doom (Hawk and Animal), who had signed with the WWF a month earlier, interfered and snuffed out the deception. Demolition never recaptured the titles after this loss.
Soon after, due to the Legion of Doom joining the WWF roster, Demolition's popularity began to decline. As a result of the Legion of Doom's interference in their championship defeat, Demolition began feuding with Hawk and Animal who would often be joined in six man matches by reigning WWF Champion The Ultimate Warrior. On the October 13 Saturday Night's Main Event XXVIII, Ax, Smash, and Crush lost to The Ultimate Warrior and the Legion of Doom. On the November 10 episode of Superstars of Wrestling, Demolition reunited with Mr. Fuji when they helped Fuji and The Orient Express assault the Legion of Doom. At the 1990 Survivor Series, The Perfect Team (Demolition and Mr. Perfect) was defeated by The Warriors (the Ultimate Warrior, the "Texas Tornado" Kerry Von Erich, and the Legion of Doom. Shortly after, Ax left the WWF, with the on-air explanation being an order from kayfabe WWF President Jack Tunney that, as a result of the incident with the Orient Express and the Legion of Doom there could henceforth only be two members of Demolition. Smash and Crush were the two remaining members, and went on to primarily lose to teams such as the Rockers and the Legion of Doom. The team lost a match to Genichiro Tenryu and Koji Kitao at WrestleMania VII. The team's final match in the WWF occurred on September 18, 1991, in a losing effort to George Takano and Shunji Takano. Afterwards, they eventually broke up and the members went their separate ways. Crush went on a leave of absence from the WWF, while Smash wrestled in singles matches (usually on the losing end) for a brief time before also leaving the WWF.