The AM.3 used the wing design of the Aermacchi AL-60 utility aircraft, strengthened to incorporate two hardpoints. The fuselage was a new design.
The first prototype, constructed by Aermacchi, flew on 12 May 1967, and it was displayed at the Paris air show in June that year. The second prototype, constructed by AERFER, flew on 22 August 1968, but the aircraft lost the Italian Army contract to the SIAI Marchetti SM.1019. Nevertheless, Aeritalia continued development.
The third prototype used a more powerful Piaggio-built Lycoming GSO-480-B1B6 in place of the original Continental GTSIO-520-C, and this variant was designated AM.3C
Pilot and observer are accommodated in tandem positions, and the craft features dual controls. Aft space is utilitarian, providing space for two stretchers or seat space for additional passengers. Additional configurations include freight transport.
Armament configurations are diverse, as well. Two standard underwing pylons were able to carry 170 kg (375 lb) of stores each. Typical armament includes machine guns, rockets, bombs and missiles. Reconnaissance packs could be fitted to, or inside of, the fuselage. Additional pylons were often added by customers.