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Development of the aircraft began in 1964, with the first flight on 20 May 1965. A twin-engine replacement for the single-engine DHC-3 Otter retaining the DHC-3's STOL qualities, its design features included double-slotted trailing-edge flaps and ailerons that work in unison with the flaps to boost STOL performance. The availability of the 550 shaft horsepower (410 kW) Pratt & Whitney Canada PT6A-20 turboprop in the early 1960s made the concept of a twin feasible
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After Series 300 production ended, the remaining tooling was purchased by Viking Air of Victoria, British Columbia, which manufactures replacement parts for out-of-production de Havilland Canada aircraft. On 24 February 2006, Viking purchased the type certificates from Bombardier Aviation for all out-of-production de Havilland Canada aircraft (DHC-1 through DHC-7). The ownership of the certificates gives Viking the exclusive right to manufacture new aircraft.
Twin Otters could be delivered directly from the factory with floats, skis, or tricycle landing gear fittings.
As of August 2006, a total of 584 Twin Otter aircraft (all variants) remained in service worldwide. Major operators at the time included.