Development of the IK-3 was initiated in 1936 as a replacement for the IK-2 parasol monoplane then is use, with the intention of providing a significant improvement in performance. Wind tunnel testing was carried out in France before being submitted to the Yugoslav Air Ministry, who approved construction of a single prototype. Construction of the IK-3 was assigned to Rogožarski A. D. in Belgrade.
The first prototype IK-3 was completed in the spring of 1938 and the first flight was achieved on April 14, 1938 powered by a Hispano-Suiza 12Y-29 liquid-cooled supercharged V12, rated at 890 hp (664 kW) for take-off and at 920 hp (686 kW) at 11,810 feet (3600 m) altitude and was armed with one 20 mm Hispano-Suiza HS-404 cannon and two 7.92 mm FN-Browning machine guns mounted over the engine. It was of mixed steel tube, wood, and fabric construction with a Messier retractable landing gear.
After the initial test flights proved successful, the prototype of IK-3 was transferred from Test group ("Opitna grupa") to the 6th Fighter Regiment where further tests were conducted. During testing on 19 January, while attempting a high speed low level pass the starboard wing structure failed causing a fatal crash, likely as a result of damage sustained during a heavy landing earlier in the day.
Subsequent investigation concluded that the failure occurred due accumulated damage on the wing spar near the wheel wells caused by several rough landings during testing. Comparative test flights during 1940 against Hawker Hurricane and Messerschmitt Bf 109E fighters, operated by the Royal Yugoslav Air Force, found the IK-3 to be an improvement over the Hurricane in general and more maneuverable than the Messerschmitt, but slower and with a poorer rate of climb.