The pre-war German doctrine for arming single-engine fighter aircraft mirrored that of the French. This doctrine favored a powerful autocannon mounted between the cylinder blocks of a V engine and firing through the propeller hub, known as a moteur-canon in French (from its first use with the Hispano-Suiza HS.8C engine in World War I, on the SPAD S.XII) and by the cognate Motorkanone in German by the 1930s. The weapon preferred by the French in this role was the most powerful 20mm Oerlikon of the time, namely the FFS model, but this proved too big for German engines. Mauser was tasked to develop a gun that would fit, with a minimum sacrifice in performance. (As a stop-gap measure, the MG FF cannon was developed and put in widespread use, but its performance was lackluster.)
Production of the MG 151 in its original 15 mm calibre format began in 1940. After combat evaluation of the 15 mm cartridge as the main armament of early Messerschmitt Bf 109F-2 fighters, the cannon was redesigned as the 20 mm MG 151/20 in 1941 to fire a 20 mm cartridge. Combat experience showed that a more powerful explosive shell was preferable to a higher projectile velocity. The MG 151/20 cartridge was created by expanding the neck of the cartridge to hold the larger explosive shell used in the MG FF cannon, and shortening the length of the cartridge case holding the longer 20 mm shell to match the overall length of the original 15 mm cartridge. These measures simplified conversion of the 15 mm to the 20 mm MG 151/20 simply by changing the barrel and making other small modifications. A disadvantage of the simplified conversion was reduction of projectile muzzle velocity from 850 metres per second (2,800 ft/s) for the 15 mm shell to 700 metres per second (2,300 ft/s) for the larger and heavier 20 mm shell. With an AP projectile the new 20mm cartridge could only penetrate around 10-12mm of armor at 300m and at 60 degrees, compared to 18mm penetration for its 15mm predecessor in the same conditions, but this was not seen as a significant limitation. The 20 mm version thus became the standard inboard cannon for the Bf 109F-4 series onwards. The 20 mm MG 151/20 offered more predictable trajectory, longer range and higher impact velocity than the 580 metres per second (1,900 ft/s) cartridge of the earlier MG FF cannon. The MG FF was retained for flexible, wing and upward firing Schräge Musik mounts to the end of the war.
The German preference for explosion rather than armor penetration was taken further with the development of the Minengeschoß ammunition, first introduced for the MG FF (in the Bf 109 E-4), and later introduced for the MG 151/20 as well. Even this improvement in explosive power turned out to be unsatisfactory against the four-engine bombers that German fighters were up against in the second part of the war. By German calculations, it took about 15-20 hits with the MG 151/20 ordnance to down a heavy bomber, but this was reduced to just 3-4 hits for a 30 mm shell, from the shattering effects of the hexogen explosive in the shells used for both the long-barreled MK 103 and shorter barreled MK 108 cannon. (Only 4-5 hits with 20 mm calibre ordnance were needed for frontal attacks, even on B-17s, but such attacks were difficult to pull off.) The 30 mm MK 108 cannon thus replaced the MG 151/20 as the standard, engine-mount Motorkanone center-line armament starting with the Bf 109 K-4, and was also retrofitted to some of the G-series.
Eight hundred MG 151/20 exported to Japan aboard the Italian submarine Cappellini in August 1943 were used to equip 388 Japanese Ki-61-I Hei fighters. The 20 mm MG 151/20 was also fitted on the Macchi C.205, the Fiat G.55 and Reggiane Re.2005 of the Regia Aeronautica and IAR 81C of the Romanian Royal Air Force.
The original 15 mm cartridge is similar to a 14.5mm round developed in World War 2 for the Soviet PTRD and PTRS antitank rifles and used in post-war heavy machine guns.