The Fiat G.50 was designed by Giuseppe Gabrielli, who started planning a single-engined monoplane fighter in April 1935. Work began on two prototypes in mid-summer 1936, construction was entrusted to the workshops of the CMASA (Costruzioni Meccaniche Aeronautiche S.A.), a subsidiary of Fiat at Marina di Pisa. Comandante Giovanni de Briganti, the chief test pilot of the G.50 program, who flew the first prototype on 26 February 1937 from Caselle airfield, Turin, reaching a top speed of 472 kilometres per hour (255 kn; 293 mph) and climbing to 6,000 metres (19,700 ft) meters in six minutes, 40 seconds.
The G.50 was a low-wing monoplane of all-metal construction, with a semi-monocoque fuselage with light alloy skinning, while the wings had a steel tube centre-section structure with duralumin outer wings and alloy skins. Flaps were fitted to the aircraft's wings to improve its take-off and landing performance. The powerplant was a single Fiat A.74 R.C.38 14-cylinder air-cooled radial engine, rated at 870 hp (650 kW) for take-off and 960 hp (720 kW) at 3,000 m (9,800 ft) enclosed in a NACA cowling and driving a three-bladed constant speed propeller. The pilot sat in an enclosed cockpit under a sliding transparent canopy. He was provided with a reflector sight to aim the fighter's armament of two 12.7 mm (.5 in) Breda-SAFAT machine guns with 300 rounds of ammunition per gun fitted ahead of the cockpit, synchronised to fire through the propeller. The aircraft was fitted with a retractable tailwheel undercarriage, with the mainwheels retracting inwards and a castoring tailwheel. It was the first front line Italian monoplane fighter with a retractable undercarriage, an enclosed cockpit and a constant speed propeller; these improvements gave it a maximum speed that was 33 km/h (21 mph) faster than its contemporary, the Fiat CR.42 biplane.
In 1937, along with the first pre-series machines, a gruppo sperimentale (experimental group) was formed. The first versions could have different weaponry: one or two 12.7-mm (.5 in) Breda-SAFAT machine guns in the nose and two more 7.7-mm (.303 in) Breda-SAFAT in the wings. Later versions were distinguished by a larger rudder.
In September 1937, Fiat received a first order for 45 aircraft. Before placing a larger order, the Air Ministry held a comparative test with the new Macchi MC.200. On 8 November 1937, de Briganti was killed on the sixth evaluation flight of the second prototype (M.M.335), when the fighter failed to pull out of a high-speed dive. Flight tests at Guidonia showed that the aircraft went too readily into an uncontrolled spin, a highly dangerous trait, especially at low level where recovery was impossible.
During a visit by the Italian King Victor Emmanuel III and Prime Minister Benito Mussolini, another tragedy occurred at Guidonia. While performing a low, fast pass, three G.50s flown by experienced pilots, Maggiore (Squadron Leader) Mario Bonzano and Lieutenants[clarification needed] Beretta and Marasco, got into difficulty. Beretta's aircraft spun uncontrollably and crashed into the ammunition laboratory, killing the pilot. Despite the crashes, flight tests were satisfactory and the Freccia proved to be more maneuverable than the faster Macchi MC.200, which was declared the winner of the Caccia I ("Fighter One") competition on 9 June 1938. On account of its maneuverability, the Regia Aeronautica Commission decided to order the G.50 as well, rejecting the third contender, the IMAM Ro.51.
The first aircraft were delivered to the Regia Aeronautica in early 1938. Italian pilots did not like the enclosed canopy because it could not be opened quickly and, being constructed from plexiglass of very poor quality, was prone to cracking or abrasion by sand or dust, limiting visibility. In addition, exhaust fumes tended to accumulate in the cockpit, so pilots usually flew with the canopy locked open. Consequently,an open cockpit was installed in the second batch of 200 machines. After 1939, the main production was shifted to the CMASA factory in Marina di Pisa, Tuscany.