Faced with a US Army Air Corps requirement of early 1934 for a bomber with virtually double the bomb load and range capability of the Martin B-10, which was then the USAAC's standard bomber, Douglas had little doubt that it could draw upon engineering experience and design technology of the DC-2 commercial transport which was then on the point of making its first flight. Designed to be at least comparable with, and possibly better than, Boeing's Model 247 which had first flown 12 months earlier and introduced new performance standards for twin-engined commercial transports, the DC-2 and later DC-3 marked the beginning of a new era for airlines all over the world.

Private venture prototypes to meet the US Army's requirements were evaluated at Wright Field, Ohio, in August 1935, these including the Boeing Model 299, Douglas DB-1 and Martin 146. The first was to be built as the B-17 Flying Fortress, the last was produced as an export variant of the Martin B-10/B-12 series, and the Douglas DB-1 (Douglas Bomber 1) was ordered into immediate production under the designation B-18 in January 1936. Derived from the commercial DC-2, the DB-1 prototype retained a basically similar wing, tail unit and powerplant. There were, however, two differences in the wing: while retaining the same basic planform of the DC-2, that of the DB-1 had a 5-ft 6-in (1.68-m) reduction in span and was mounted in a mid-wing instead of low-wing position. The powerplant comprised two 930-hp (694-kW) Wright R-1820-45 Cyclone 9 engines, each driving a three-bladed constant-speed metal propeller. The entirely new fuselage was considerably deeper than that of the commercial transport, to provide adequate accommodation for a crew of six, and to include nose and dorsal turrets, a bomb aimer's position, and an internal bomb bay; there was, in addition, a third gunner's position, with a ventral gun discharging via a tunnel in the underfuselage structure.

A total of 133 B-18s was covered by the first contract, this number including the single DB-1 which had served as a prototype. True production aircraft, however, had a number of equipment changes, producing an increase in the normal loaded weight. The last B-18 to come off the production line differed by having a power-operated nose turret, and carried the company identification DB-2, but this feature did not become standard on subsequent production aircraft.

The next contracts, covering 217 B-18As, were placed in June 1937 (177) and mid-1938 (40). This version differed by having the bomb aimer's position extended forward and over the nose gunner's station, and the installation of more powerful Wright R-1820-53 engines. Most of the USAAC's bomber squadrons were equipped by B-18s or B-18As in 1940, and the majority of the 33 B-18As which equipped the USAAC's 5th and 11th Bomb Groups, based on Hawaiian airfields, were destroyed when the Japanese launched their attack on Pearl Harbor.

When B-18s were replaced in first-line service by B-17s in 1942, some 122 were equipped with search radar and magnetic anomaly detection (MAD) equipment for deployment in the Caribbean on anti-submarine patrol. The Royal Canadian Air Force also acquired 20 B-18As which, under the designation Digby I, were employed on maritime patrol. The designation B-18C applied to two other aircraft reconfigured for ASW patrol. Another two aircraft were converted for use in a transport role as C-58s, but many others were used similarly without conversion or redesignation.