In the late 1950s, a requirement arose to replace the piston-engined Nord Noratlas transports operated by both the air forces of France (Armée de l'Air) and Germany (Luftwaffe). Keen to encourage industrial co-operation between the two countries, as had happened under a previous arrangement in which Noratlases for German service had been built under license by Weser Flugzeugbau, France and Germany signed an agreement for the development of a Noratlas successor on 28 November 1957. The Italian government also became involved in the project early on to meet their own requirements, however Italy's participation in the fledging program was soon terminated in favour of a smaller and entirely domestically-built aircraft, the Fiat G.222.
A consortium, "Transporter-Allianz" or Transall, was formed in January 1959 between the French company Nord Aviation and the German companies Weser Flugzeugbau (which became Vereinigte Flugtechnische Werke (VFW) in 1964) and Hamburger Flugzeugbau (HFB) to design and build the new transport. The new aircraft was required to carry a 16,000 kilograms (35,000 lb) cargo over a range of 1,720 kilometres (930 nmi; 1,070 mi) or a load of 8,000 kg (18,000 lb) over a range of 4,540 km (2,450 nmi; 2,820 mi) and be able to operate out of semi-prepared airstrips. One prototype was built by each of the production partners, with the first (built by Nord) flying on 25 May 1963, with the VFW and HFB-built prototypes following on 25 May 1963 and 19 February 1964. These were followed by six pre-production examples, stretched by 51 centimetres (20 in) compared with the prototypes, which flew between 1965 and 1966.
Production orders were delayed by attempts by Lockheed to sell its C-130 Hercules transport to Germany; these attempts were rebuffed, and a contract was signed for 160 C-160s (110 for Germany and 50 for France) on 24 September 1964. The manufacturing work-share was split between Germany and France in line with the number of orders placed; Nord built the wings and engine nacelles, VFW the centre fuselage and horizontal tail, and HFB the forward and rear fuselage. The aircraft's tailfin was to be built by Dornier. Three production lines were set up to assemble these components, one run by Nord, and the other two by VFW and HFB.
The first production airframes were delivered to France and Germany from 1967. The first batch included 110 C-160Ds for the German Air Force (Luftwaffe), 50 C-160Fs for the French Air Force, and nine C-160Zs for the South African Air Force. Four C-160Fs were converted to C-160P air mail transport aircraft, and were operated by Air France. Production continued until October 1972. Britain expressed interest in both procuring and manufacturing C-160s; while talks took place between Transall, the British Aircraft Corporation, and the British Government, the C-130 was opted for instead.
In July 1977, France placed an order for 25 aircraft to be built to an updated standard. The production workload for the new aircraft was split 50-50 between Aérospatiale (the successor to Nord) and MBB (which had absorbed VFW and HFB), with a single assembly line in Toulouse. The new version lost the cargo loading door on the port side of the fuselage, but gained provision for additional fuel tanks in the wing centre section. When fitted these tanks increased fuel capacity from 19,000 litres (4,190 imp gal) to 28,000 litres (6,170 imp gal). The aircraft were also fitted with updated avionics. The first second generation C-160 took flight in 1981. Aircraft produced in this batch included 29 for France (an additional four non-standard aircraft were constructed for special missions), and 6 for Indonesia.
The Transall C-160 is a twin-engine tactical transport; featuring a large-volume cargo hold, a rear-access ramp underneath an upswept tail, a high-mounted wing and turboprop engines. As designed, the C-160 can perform cargo and troop transport duties, aerial delivery of supplies and equipment, operate directly from frontline positions, and evacuate casualties. The fuselage cross-section had been designed to be compatible with international railway loading gauges to ease cargo logistics and the loading process; in flight the cargo area is pressurised and kept at a constant temperature by integrated air conditioning systems.
One aspect of the C-160 that made the type well suited to tactical operations was the type's short airfield performance; including the ability to perform steep descents of up to 20 degrees and perform landings on airstrips as short as 400 meters. In the airlift role, a later production C-160 could carry up to 8.5 tons across a distance of 5,000 kilometers, and take off from airstrips as short as 700 meters. Dependent upon aircraft configuration, a single aircraft could airdrop as many as 88 paratroopers or transport up to 93 equipped troops.
The C-160 is powered by a pair of two Rolls Royce Tyne turboprop engines, which drives a pair of four-bladed propellers. The advantages of the twin-engine configuration include reduced unit and production cost, lower weight and fuel consumption, simplifying aircraft design and reliability. Each engine is equipped with an auxiliary generator system, providing the aircraft with both electricity and hydraulic pressure; an auxiliary power unit is used to power the aircraft while on the ground, and for rare use in mid-air emergencies.
An updated second generation of the C-160 was produced during the 1980s. Amongst changes made, the second generation was equipped with additional fuel tankage, aerial refuelling probes, and avionics improvements. While there were considerably changes to aspects of the cockpit, such as the navigational and autopilot systems, the second generation C-160 was intentionally designed with identical operating characteristics in order for crews to be interchangeable between older and newer aircraft without difficulty. The second generation C-160s were also designed for potential adaption to perform other roles such as maritime patrol and aerial fire fighting.
The C-160 proved to be a versatile aircraft, leading to a long operational service life. Between its introduction and 1999, approximately 2000 modifications and upgrades were incorporated upon the type, split 60/40 between the structure and equipment respectively. Many changes were made over time in regards to the aircraft's avionics: particular attention was paid in Luftwaffe refurbishments to the navigation and flight control systems, onboard data management computers and radar system, incorporating new features such as GPS and laser inertial navigation systems, modern autopilot and crew management systems, and a greater degree of cockpit integration.
Other improvements and additions to the type include protective kevlar armouring, electronic warfare management systems, chaff/flare dispensers, missile approach warning systems, TCAS collision warning system, new internal intercom and re-wiring. Extensive efforts have been made by both France and Germany to extend the aircraft's operating lifespan up to and if necessary beyond 55 years to 2018. For example, in 2003–2004, Germany signed separate contracts with Terma A/S and Northrop Grumman to upgrade the aircraft's electronic warfare self-protection and missile approach warning systems.
Three prototypes were built, one by each production company.
- V1 was built by Nord Aviation at Bourges, France and first flew on 25 February 1963.
- V2 was built by VFW at Lemwerder, Germany and first flew on 25 May 1963
- V3 was built by HFB at Hamburg-Finkenwerder and first flew on 19 February 1964.
- C.160A : Six pre-production aircraft were built for Franco-German trials.
- C.160C : Proposed commercial derivative, including a stretched 150-passenger version.
The initial production run of 169 aircraft were built by the three companies in France and Germany; Nord built 56 aircraft, VFW built 57 aircraft and HFB/MBB 56 (HFB became part of Messerchmitt-Bolkow-Blohm in 1969 during the production run). All three production lines produced a mixture of aircraft for France and Germany but the South African aircraft were all built by Nord.
- C.160D : Production aircraft for the West German Air Force; 110 were built. Twenty of these aircraft were delivered to Turkish Air Force in 1971 as C-160T. A few of the remaining German C-160 were fitted with the self-protection suite called ESS.
- C.160F : Production aircraft for the French Air Force; 50 were built.
- C.160P : Conversion of C-160Fs for use by the French Postal Service.
- C.160Z : Production aircraft for the South African Air Force; nine were built.
From 1981 on, some new C-160 reached the wings of Armee de l'Air. The now C-160NG (Nouvelle Generation, New Generation) called aircraft has an fifth fuel tank in the middle of the wing above the fuselage, a refueling probe while the left side cargo door was removed. Some first-production series C-160F were fitted with the NG-versions changes and renamed C-160R (Renové).
Beside these changes, French Air Force introduced the C-160G Gabriel, a version for electronic reconnaissance, easily to distinguish because of the antennas fitted to the aircraft.
Until the early 2000s, also the C-160H Astarte was used, while Astarté (Avion Station Relais de Transmissions Exceptionelles), meaning "airborne relay station for special transmissions", was used for communication with submerged French nuclear submarines.