John Northrop's interest in the flying wing concept is now legendary, but serious work on developing an operational aircraft did not begin until 1940, when Northrop flew the all-wing N-1M, with two small piston engines buried in the structure. From this small aircraft Northrop was convinced that an all-wing bomber was feasible, offering outstanding range/payload characteristics. The USAAF was similarly convinced, and an evaluation contract was awarded for the XB-35 bomber. To validate the shape of the aircraft four N-9M scale trials aircraft were built, the first of which flew in December 1942. These undertook a year-long series of trials at Muroc Dry Lake which explored the handling of the flying wing design, and which provided the data for the bomber's autopilot.

Two prototype XB-35s were ordered in November 1941, the mock-up was approved in July 1942, and the first prototype flew at Hawthorne on 25 June 1946 with Max Stanley at the controls, following many problems with pusher propellers and their gearboxes.

The first XB-35 (42-13603) was powered by four Pratt & Whitney Wasp Majors buried in the wings, aspirated and cooled through a series of slots in the leading edge. The crew was housed in the central area, which terminated in a bullet tailcone. The nosewheel retracted to port, leaving an area to starboard for the bombardier, who was provided with glazed panels in the leading edge. The first prototype was fitted with eight-bladed contra-rotating propellers.

A second XB-35 (42-38323) flew in 1947, and introduced single-rotation propellers, which were retained for the 13 YB-35s (42-102366/42-102378) which had been ordered in 1943. Only the first of these aircraft flew in its piston-engined form, the remainder being earmarked for conversion on the production line to jet power as the B-49.

The end of World War II and continuing orders for Convair's mighty B-36 spelled the end for the B-35, and the initial order for 200 B-35As (placed with Martin) was cancelled. The flying aircraft remained on test duties until late 1949.