In the mid-1930s, Germany began a program of rapid rearmament with the latest types of military equipment. This was especially true in aviation, as from 1919 until the early 1930s the country was prohibited from having military aircraft under the terms of the Treaty of Versailles. Numerous technical developments, which were mostly worked on in secret during the bans, were now converted into prototypes in a short period of time and, after testing, immediately put into production and then transferred directly to the military.

In 1935, when the famous He 51 biplane fighter was already tested and proven, another aircraft appeared, purposed for the same role and structurally similar, the Arado Ar 68. Despite the fact that in comparative testing of the two types, the development from Arado displayed better performance, the military still showed a preference for the He 51 and soon it joined the ranks of the Luftwaffe in large numbers. Nevertheless, the newly appointed Chief Inspector of Fighter Aviation and famous ace of the First World War, Ernst Udet, insisted to his longtime comrade and Luftwaffe commander, Hermann Goering, that the Arado design should also reach military units. He was confident in the excellent qualities of the aircraft and believed that for a trained pilot, this fighter would be superior to all other types.