In 1940 the Interstate Aircraft and Engineering Corporation of El Segundo, California, entered the expanding market for two-seat high-wing monoplanes exemplified by the Piper Cub and produced the Model S-1 Cadet which was offered with a choice of four engines: a Continental of 65 hp (48 kW), or Franklin engines of 65, 85 or 90 hp (48, 63 or 67 kW). These initial variants all bore the designation S-1A with an appropriate suffix, respectively -65C, -65F, -85F or -90F.

Interstate, which produced bomb shackles, hydraulic systems and other items for military aircraft, saw that a military order for the S-1 could help to launch the design into mass production and produced the S-1B with the transparent canopy extended aft to assist in the military liaison and air observation post roles. A 102-hp (76-kW) Franklin O-200-5 four-cylinder air-cooled engine was fitted, and the prototype (42-15895) selected for US Army evaluation was designated XO-63 (it was the last aircraft to receive an Observation designation although this was later changed to XL-6.

As a result of successful evaluation, the US Army ordered a production batch of 250 (43-2559 to 43-2808), to be designated O-63 but entering service as the L-6 Grasshopper, sharing the name with other light aircraft types procured for the army observation role. Eight further Model S.1A Cadets were procured by the USAAF as the L-8A on behalf of the Bolivian air force.