Project Grudge was the second investigation into the problem of 'flying disks' (or UFOs as they were soon to become known) carried out by the US Air Force, following the year-long Project Sign. Unlike its predecessor, Grudge was dismissive of the extraterrestrial hypothesis and sought instead to explain away sightings in terms of natural phenomena (such as the planet Venus) or illusions. To this end, it appointed an astronomical consultant, J. Allen Hynek. However, Grudge's attempts to demystify all the claimed aerial activity had the opposite effect to that intended. Supporters of the extraterrestrial hypothesis began to ask why, if the Air Force regarded UFOs as easily explicable, it had shown so much interest in them? In 1950, Donald Keyhoe began making accusations of a cover-up. Ironically, at the end of the same year, Grudge had been wound down to such an extent that the investigation team consisted of a single junior officer.

The Air Force's interest in UFOs was briefly revived by a new wave of sightings in 1951–1952, following which Grudge gave way to Project Blue Book.