The BTR-152 and BTR-40, the first two Soviet mass-produced APCs developed after the Second World War gave the Soviet Army useful experience with wheeled armoured personnel carriers. However, even as they were designed, they weren't suited for the needs of the Soviet Army as they lacked a roof (which was added in later versions designated BTR-152K and BTR-40B respectively). The low combat values of the BTR-152 and BTR-40 were exposed during the Suez Crisis, when the Egyptian Army used them. This was one of the reasons why the new APC was developed.
Between 1956 and 1957, a decision was made to convert all rifle and mechanized divisions into new motor rifle divisions and a requirement for a new vehicle was drawn up.
Development proceeded along two paths: a more expensive vehicle that would eventually become the BMP-1, for use in tank divisions, and a cheaper vehicle for use in motor rifle divisions, that would eventually become the BTR-60. Two design bureaus were given the requirements, GAZ led by V. A. Dedkov, and ZiL led by Rodionov and Orlov. The requirements stated that the vehicle should have all wheel drive, at least two turnable axles, independent suspension as well as mobility and fording capabilities allowing it to operate alongside tanks. The vehicle was also supposed to be amphibious. GAZ design team started to work on the new APC during the winter of 1956. Despite the fact that the army wanted a fully roofed vehicle with NBC protection system, the GAZ design did not have those features. It was argued that firing from the cramped interior would be difficult and that the limitation of losses wasn't a priority. The prototype was built between 1957 and 1958. ZiL developed a 6x6 design, the ZiL-153, similar in hull shape to the GAZ design. There were also three other 8x8 prototypes: Ob'yekt 560 (also known as MMZ-560), Ob'yekt 1015 (developed by KAZ), Ob'yekt 1015B (developed by KAZ, it had with a turret-mounted armament and stream propellers, also known as BTR-1015B) and Ob'yekt 1020B (developed by KAZ). All prototypes were submitted to and passed state trials in 1959. Even though the Ob'yekt 1015B performed best, the GAZ design was selected and given the designation BTR-60P. Officially, the committee that made the decision did so because of the GAZ plant's production capabilities and experience. The main reason was that the GAZ design was the simplest and cheapest one and introduced the lowest amount of technological advancements, which made it easier to put into mass production.
BTR-60P had open-roofed crew and troop compartments, which was deemed to be a serious disadvantage. Accordingly, a new version with an armoured roof, designated BTR-60PA, entered production in 1963. This new version's capacity was reduced from 16 soldiers to 14 soldiers.
The appearance of the German HS.30 APC, which was armed with a 20 mm cannon, prompted the addition of the conical BPU-1 turret. This turret, which was originally developed for the BRDM-2 amphibious armoured scout car, was armed with the KPVT 14.5 mm heavy machine gun and a PKT 7.62 mm tank machine gun. The new vehicle was designated the BTR-60PAI and entered production in 1965. It was, however, quickly replaced by the BTR-60PB, which had a better sighting system for the machine guns.