The Sturmgeschütz III originated from German experiences in World War I when it was discovered that, during the offensives on the western front, the infantry lacked the means to effectively engage fortifications. The artillery of the time was heavy and not mobile enough to keep up with the advancing infantry to destroy bunkers, pillboxes, and other minor obstacles with direct fire. Although the problem was well known in the German army, it was General Erich von Manstein who is considered the father of the Sturmartillerie ("assault artillery"). This is because the initial proposal was from (then) Colonel Erich von Manstein and submitted to General Ludwig Beck in 1935, suggesting that Sturmartillerie units should be used in a direct-fire support role for infantry divisions. On June 15, 1936, Daimler-Benz AG received an order to develop an armoured infantry support vehicle capable of mounting a 75 mm (2.95 in) calibre artillery piece. The gun mount's fixed, fully integrated casemate superstructure was to allow a limited traverse of a minimum of 25° and provide overhead protection for the crew. The height of the vehicle was not to exceed that of the average soldier.
Daimler-Benz AG used the chassis and running gear of its recently designed Panzer III medium tank as a basis for the new vehicle. Prototype manufacture was passed over to Alkett, which produced five prototypes in 1937 on Panzer III Ausf. B chassis. These prototypes featured a mild steel superstructure and Krupp’s short-barrelled, howitzer-like in appearance, 75 mm StuK 37 L/24 cannon. Production vehicles with this gun were known as StuG III Ausführung (version) A to E.
While the StuG III was considered self-propelled artillery, it was not initially clear which land combat arm of the Wehrmacht Heer would handle the new weapon. The Panzer arm, the natural user of tracked fighting vehicles, had no resources to spare for the formation of StuG units, and neither did the infantry branch. It was agreed, after a discussion, it would best be employed as part of the artillery arm.
The StuGs were organized into battalions (later renamed "brigades" for disinformation purposes) and followed their own specific doctrine. Infantry support using direct-fire was its intended role. Later there was also a strong emphasis on destroying enemy armour whenever encountered.
As the StuG III was designed to fill an infantry close support combat role, early models were fitted with a low-velocity 75 mm StuK 37 L/24 gun to destroy soft-skin targets and fortifications. After the Germans encountered the Soviet KV-1 and T-34 tanks, the StuG III was first equipped with a high-velocity 75 mm StuK 40 L/43 main gun (Spring 1942) and in Autumn 1942 with the slightly longer 75 mm StuK 40 L/48 gun. These versions were known as the Sturmgeschütz 40 Ausführung F, Ausf. F/8 and Ausf. G.
When the StuG IV entered production in late 1943 and early 1944, the "III" was added to the name to separate it from the Panzer IV-based assault guns. All previous and following models were thereafter known as Sturmgeschütz III.
Beginning with the StuG III Ausf. G from December 1942, a 7.92 mm MG34 machine gun could be mounted on a shield on top of the superstructure for added anti-infantry protection. Some of the F/8 models were retrofitted with a shield as well. Many of the later StuG III Ausf. G models were equipped with an additional coaxial 7.92 mm MG34.
The vehicles of the Sturmgeschütz series were cheaper and faster to build than contemporary German tanks; at 82,500 RM, a StuG III Ausf G was cheaper than a Panzer III Ausf. M, which cost 103,163 RM. This was due to the omission of the turret, which greatly simplified manufacture and allowed the chassis to carry a larger gun than it could otherwise. By the end of the war, ~11,300 StuG IIIs and StuH 42s had been built.