The .38 Special was designed and entered production in 1898 as an improvement over the .38 Long Colt which, as a military service cartridge, was found to have inadequate stopping power against the charges of Filipino Muslim warriors during the Philippine–American War.

Despite its name, the caliber of the .38 Special cartridge is actually .357 inches (36 caliber/9.07 mm), with the ".38" referring to the approximate diameter of the loaded brass case.

The .38 Special was designed and produced in 1898 to be a higher-velocity round, with better penetration properties than the .38 Long Colt that was in government service in the Philippines during the Spanish–American War.

Testing revealed that the longer, heavier 200-grain (13 g) .357-calibre bullet fired at low velocity tended to 'keyhole' or tumble upon impact, providing more shock effect against unprotected personnel.

The media attention gathered by the 38/44 and its ammunition eventually led Smith & Wesson to develop a completely new cartridge with a longer case length, in 1934.

During World War II, some U.S. aircrew (primarily Navy and Marine Corps) were issued .38 Special S&W Victory revolvers as sidearms for use in the event of a forced landing.

In May 1943, a new .38 Special cartridge with a 158-grain (10.2 g), full-steel-jacketed, copper flash-coated bullet meeting the requirements of the Hague Convention was developed at Springfield Armory and adopted for the Smith & Wesson revolvers.

[16] During the war, many U.S. naval and Marine aircrew were also issued red-tipped 38 Special tracer ammunition using either a 120 or 158 gr (7.8 or 10.2 g) bullet for emergency signaling purposes.

The original 38 M41 ball cartridge used a 130-grain full-metal-jacketed bullet, and was loaded to an average pressure of only 13,000 pounds per square inch (90 MPa), giving a muzzle velocity of approximately 725 ft/s (221 m/s) from a 4-inch (100 mm) barrel.

[20] A variant of the standard M41 cartridge with a semi-pointed, unjacketed lead bullet was later adopted for CONUS (Continental United States) police and security personnel.

[18] At the same time, .38 Special tracer cartridges were reintroduced by the US Navy, Marines, and Air Force to provide a means of emergency signaling by downed aircrew.

Tracer cartridges in .38 Special caliber of different colors were issued, generally as part of a standard aircrew survival vest kit.

[21] The FBI Load combined a more powerful powder charge with a 158-grain unjacketed soft lead semi-wadcutter hollow-point bullet designed to readily expand at typical .38 Special velocities obtained in revolvers commonly used by law enforcement.

[21] The FBI Load proved very satisfactory in effectively stopping adversaries in numerous documented shootings using 2- to 4-inch barreled revolvers.