Intended as a replacement for the Junkers Ju 86 in service with the Swedish Air Force, the requirement that led to the Saab 18 called for a three-seat fast reconnaissance aircraft.
AB Svenska Järnvägsverkstädernas Aeroplanavdelning (ASJA), SAAB, and AB Götaverken (GV) submitted designs for consideration by the Swedish Air Force. GV's GV8 appeared to be the best suited to the requirement; however, its cost and the departure of their chief designer resulted in SAAB — the company having merged with ASJA in the meantime — being awarded a contract for development of their design.
As a number of Americans were on the design staff of SAAB and ASJA, the Saab 18's design shared some similarities with American designs. The outbreak of World War II in 1939 led to a change of priorities by the Swedish Air Force, and production of the Saab 17 was accelerated, at the expense of work on the Saab 18, which, along with a change of requirements that added the role of medium bomber to the specification, resulted in the first flight of the aircraft being delayed until 19 June 1942.
Manned by a crew of three — a pilot and navigator under a glazed, offset canopy, and a bombardier in the nose — the Saab 18 prototype was a mid-wing monoplane with twin vertical stabilisers, and was powered by two Pratt & Whitney R-1830 Twin Wasp radial engines. Armament consisted of three 13.2-millimetre (0.52 in) machine guns, one fixed firing forwards and controlled by the pilot, the others being in flexible defensive mounts for use by the navigator and bombardier. Up to 1,000 kilograms (2,200 lb) of bombs could be carried in an internal bay, while up to eight 50-kilogram (110 lb) bombs could be carried on underwing hardpoints.
Flight testing showed that the aircraft was underpowered. However, as there was no immediate prospect for the acquisition of more powerful engines, the Saab 18 was ordered into production in both bomber (B 18A) and reconnaissance (S 18A) versions.