Dhanoa was Commanding Officer of a front line ground attack fighter squadron during the Kargil Conflict in 1999. Under his leadership the squadron devised innovative methods of night bombing at high altitudes which had never been attempted before. His squadron was adjudged the best fighter squadron of HQ WAC. He was awarded Yudh Seva Medal (YSM) and Vayu Sena Medal (VM) for his gallant actions in this conflict.