American M5 light tank was a direct development of M3 light tank series, which had its roots in the 1930s. During 1930s, Americans developed number of light tanks for infantry units and combat cars for cavalry units. Americans began their development of a light tank based on a British Vickers-Armstrong Six-Ton Export tank, which was the most influential tank design of the inter-war period (e.g. Soviet T-26 and Polish 7TP light tanks).
Americans based on their experience with Vickers-Armstrong tank, developed their own T1E4 light tank. At the same time, Americans developed T1 combat car also known as Christie tank. In 1934, T2 light tank and T5 combat car were completed, which shared common components. In 1935, improved T5 combat car entered production designated M1 combat car and T2 light tank designated M2A1 light tank. Single turret M2A1 was soon replaced by twin turret M2A2 light tank. In 1938, improved M2A3 light tank entered production along with improved M1A1 combat car. In May of 1940, based on the experiences with previous armoured fighting vehicles and reports from Europe, improved M2A4 light tank entered production. Following the fall of France in June of 1940, USA realized the need to expand and modernize its armoured fighting force. First step involved combining all combat cars and light tanks under single command. M1 and M1A1 combat cars were designated M1A2 light tanks and M2 combat cars M1A1 light tanks. Work on new M3 light tank begun in July of 1940. New tank combined features of both M2A4 light tank and M2 combat car. Production began in March of 1941 by American Car & Foundry plant. New vehicle was in the same class as Soviet T-26, Polish 7TP and Czechoslovak/German LT-38 / PzKpfw 8(t) light tanks. By 1944, over 18000 M3 light tanks were produced in three main variants – M3, M3A1 and M3A3. M3 light tanks were also known as General Stuart, Stuart and Honey by the British. M3 was known as Stuart I, M3A1 as Stuart III and M3A3 as Stuart V.
In the summer of 1941, trials were carried with modified M3 light tank fitted with two gasoline Cadillac V8 car engines instead of single Continental W-670 gasoline aircraft engine or Guiberson T-1020 diesel engine. The twin engines were coupled with Hydramatic automatic transmission, which made it easy to drive the tank. The further development of this new light tank designated as M4 was approved in November of 1941. New M4 light tank was to have newly designed and larger welded hull and was fitted with same turret as M3A3 light tank. Some mechanical components were relocated and resulted in more space for the crew. Prototype was tested in April of 1942 and was designated as M5 light tank not to be confused with M4 medium tank (General Sherman). In April of 1942, production started at Cadillac Motor Car Division and in July 1942 at Massey Harris Company. In September of 1942, M5 was modified based on the experiences with M3A3 and was designated as M5A1 light tank. From April of 1942 to June of 1944, mainly Cadillac Motor Car Division along with Massey Harris Company and American Car & Foundry produced 4148 M5 and 6810 M5A1 light tanks. M5A1 was also known as Stuart VI. M5 light tank was followed by unsuccessful M7 light (medium) tank to be eventually replaced by M24 Chaffee light tank.