When TWA, faced with an urgent need to replace its Fokker airliners, found itself behind United Air Lines in the queue for Boeing's Model 247, the airline's vice president of operations, Jack Frye, drew up a specification for an all-metal three-engined airliner with seats for at least 12 passengers and able to cruise at 146 mph (235 km/h) for more than 1,000 miles (1,609 km). Gross weight was to be a maximum of 14,200 lb (6,441 kg), rate of climb 1,200 ft (366 m) per minute and service ceiling 21,000 ft (6,400 m).

Donald W. Douglas responded within a fortnight to Frye's specification, issued to the US industry on 2 August 1932, and a contract was signed on 20 September, Douglas having convinced TWA technical adviser Charles Lindbergh that the required performance could be achieved safely on only two engines. The prototype, identified as the DC-1, was rolled out on 22 June 1933 and, powered by two Wright R-1820 Cyclones, made its maiden flight at 1236 on 1 July, piloted by Carl Cover with project engineer Fred Herman as co-pilot.

Despite initial carburetor problems, the test program was completed successfully and the aircraft was handed over to TWA at Los Angeles Municipal Airport in December. The DC-1 never entered service, being used for promotional purposes by TWA. These included a coast-to-coast record flight of 13 hours 4 minutes through the night of 18/19 February 1934, when Frye and Eddie Rickenbacker of Eastern Airlines flew the aircraft on the last Los Angeles-Newark airline mail flight. This was in protest against the Roosevelt administration's decision to cancel all existing mail contracts with effect from midnight on 19 February 1934.

An initial contract was signed for 25 production aircraft, with some structural changes which resulted in redesignation to DC-2, and the first example was delivered to TWA on 14 May 1934, entering service four days later. The DC-2 was quickly adopted by other US airlines, including American and Eastern, and attracted export orders which included aircraft to KLM and Swissair.

The US Army Air Corps opened its purchases for fiscal year 1936 with a 16-seat DC-2, which was evaluated as the XC-32 and which led to orders for two externally similar YC-34s and 18 C-33s, the latter type having enlarged vertical tail surfaces and a cargo door. In 1937 a C-33 was fitted with a DC-3 tail unit and redesignated C-38; from it was developed the C-39, with other DC-3 components, which included the wing center-section and landing gear, and 975-hp (727-kW) R-1820-55 engines. Thirty-five were ordered for the army's transport groups, entering service in 1939.

The fourth and fifth C-39s were converted while still on the production line to C-41 and C-42 standard, respectively. The first was fitted with 1,200-hp (895-kW) Pratt & Whitney R-1830-21 Twin Wasps and cleared to operate at a gross weight of 25,000 lb (11,340 kg), while the second was powered by 1,200-hp (895-kW) Wright R-1820-53 Cyclones and cleared at 23,624 lb (10,716 kg). Two more C-39s were later converted to C-42s, while 24 civil DC-2s impressed in 1942 received the designation C-32A. These aircraft lacked cargo doors.

The DC-2s in military service were used extensively, especially in the early years of World War II, and are remembered especially for their role in carrying US survivors from the Philippines to Australia in December 1941.