It was established in 1934 under the cover name Reichswehrdienststelle Hamburg, and did not assume its bona-fide designation until the creation of the Wehrmacht was announced in October 1935.

In May 1940 the division took part in the invasion of France, and remained there on occupation duty until April 1941, except for one brief period on reserve in Germany.

In September it was transferred to Army Group North, and it spent most of 1942 on the Volkhov Front.

In December it was transferred back to Army Group Centre for the relief attempt at the Battle of Velikiye Luki.

In July 1943 it was redesignated as 20th Panzergrenadier Division; by that time it had been given an assault gun battalion to support its infantry.