The completed DC-XA rolled out on schedule on March 15, 1996, and arrived at White Sands, New Mexico, seven days later. After engine tests took place on May 4 and 7, 1996, the DC-XA was ready to being flight testing. The series of five flights would (1) verify the functioning and operational suitability of the new hardware; (2) test the hardware and software functions of the integrated vehicle, the three-person Flight Operations Control Center, and the 15-person ground support crew under launch and flight conditions, and (3) determine the operational characteristics and flight readiness of the vehicle for any subsequent flight tests. Another objective was to turn the vehicle around and fly it again after only 72 hours, and to perform the rotational maneuver.

The first flight of the DC-XA took place on May 18, 1996, at White Sands, New Mexico. The vehicle climbed 800 feet (244 meters) from the launch stand, then flew laterally for 350 feet (115 meters), before descending to the landing pad. The total flight time was about one minute (62 seconds). The flight went as planned until the landing, when the DC-XA descended slower than expected.

The desired landing velocity was around four feet per second. Previous DC-X touchdowns varied from two feet per second to as high as fourteen feet per second, the last caused by an invalid data problem with a radar altimeter rather than the landing control software. The problem with slow landings is that the vehicle sits in the backwash from the rocket engines too long, and the base of the vehicle can suffer heat damage. This first DC-XA landing started a small fire on the exterior of the vehicle, which was promptly extinguished. One of the vehicle's four body-flaps (hinged square control surfaces, one on each side of the conical vehicle near its base) was damaged and had to be replaced.

Following repairs, the DC-XA, now dubbed the Clipper Graham in honor of the recently deceased Lt. Gen. Daniel O. Graham, undertook its second flight on June 7, 1996. The Clipper Graham climbed vertically to an altitude of 590 meters, then flew laterally for 180 meters before descending tail first onto the desert floor. Total flight time was 63.6 seconds. The flight tested the differential global positioning system (DGPS) that provided positional data to the Clipper Graham's navigational system. Signals from satellites of the Global Positioning System and a ground station were used to precisely determine the position of the reusable rocket.

The following day, June 8, 1996, the Clipper Graham flew again, only 26 hours after the previous flight. This was a record turnaround time for any rocket-powered vehicle. The third flight also set a new altitude and duration record. The DC-XA reached an altitude of 3,140 meters and flew during a flight that lasted 142 seconds.

The fourth flight took place the following month, on July 31, 1996. The vehicle reached an altitude of 1,250 meters (4,100 feet) during a flight that lasted 140 seconds. The Clipper Graham completed its planned flight profile, which included an arc-like sweeping maneuver from a near upright position, before descending base-first. All of the vehicle's components appeared to function normally. However, 98 seconds into the flight, at approximately 400 feet, the DC-XA computer commanded deployment of the four landing gear.

Over the next five seconds, three of the four legs successfully deployed, first landing gears 1 and 4, which deployed within one-tenth of a second of each other, then landing gear 3 one full second later. Landing gear 2 never deployed. Nonetheless, the craft landed safely on three of its four legs. Upon detection of the weight-on-gear indication, a signal that the vehicle had landed, the Clipper Graham's engines terminated turned off, then the vehicle toppled toward the position of landing gear 2.

Upon impact, the vehicle was destroyed in a series of three explosions spaced over the next 90 seconds. The first explosion ignited the composite shell and the avionics rack. Ten seconds after the initial explosion, the fire suppression system began releasing water. A second explosion of liquid oxygen from the aluminum-lithium tank rocked the mishap scene ten seconds after the first explosion. The fire suppression system shut down after the tank ran out of water, but before the fire was extinguished. About one minute after the second explosion, the hydrogen tank exploded. This third explosion scattered the composite material from the aeroshell and hydrogen tank over the accident scene.

The Clipper Graham was totally destroyed by ground impact and the ensuing explosions and fires. The upper two-thirds of the composite aeroshell, the aluminum-lithium liquid oxygen tank, the composite liquid hydrogen tank, the composite intertank, avionics, nose cone, and parachute recovery systems were destroyed during the three explosions and subsequent fire. Parts of landing gears 3 and 4 were melted in the fire, as well. Landing gear mechanisms 1 and 2 were damaged during the mishap. The lower one-third of the vehicle aeroshell, containing the four RL-1O engines and the auxiliary propulsion system, were charred and covered with soot. The RL-10 engines and auxiliary propulsion system were the only items apparently recoverable.

Videotapes of the flight and still photographs of the wreckage showed that landing gear 2 had failed to deploy. Also, post mishap inspection found the landing gear to be stowed and the pneumatic brake line not connected. NASA established a Mishap Investigation Board and investigated the causes of the incident. Whatever their conclusions, the fourth flight marked the end of the Clipper Graham.