Technical specifications were first published in October 1938, followed by detailed plans later that year. In May 1939 the RLM ordered a run of six prototypes. The first Ar 240 V1 prototype, DD+QL, took to the air on 25 June 1940, and immediately proved to have terrible handling in all three axis, and also tended to overheat during taxiing.
The handling was thought to be the result of the ailerons being too small given the thick wing, so the second prototype was modified to have larger ones, as well as additional vertical fin area on the dive brakes to reduce yaw. In addition small radiators were added to the gear legs to improve cooling at low speeds, when the gear would normally be opened. Ar 240 V2, KK+CD, first flew on 6 April 1941, and spend most of its life at the factory as a test plane.
V3 followed, the first to be equipped with the FA 9 rear-firing armament system, developed jointly by Arado and DVL, armed with a 7.92 mm MG 81Z twin machine gun. V4 was the first to include an operational dive brake, and flew on 19 June 1941. V5 and V6 followed in December and January, including the upgraded FA 13 system using two 13 mm MG 131s in place of the MG 81Z for a considerable boost in firepower.
The Ar 240's excellent performance quickly led to the V3, V5 and V6 being stripped of their armament, including the defensive guns, and used as reconnaissance aircraft over England, where no other two-seater could venture by 1942.