On September 15, 1939, the AHA/AgK/In 6 issued an order to the Army Weapons Department to develop the PzKpfw I into a reconnaissance and air landing tank. It was decided to mount the PzKpfw II turret on to a modified PzKpfw IB chassis. Krauss Maffei and Daimler-Benz were asked to build the prototype.
In January 1941 the Army Weapons Department accepted the prototype and placed an order for 40 vehicles from Krauss-Maffei AG of Munich. The project was cancelled in the summer of 1941.
The PzKpfw I Ausf C had interleaved road wheels.
The main armament had a TZF10 gun sight.