By the mid-1950s, tram fleets in Soviet cities were technically outdated, with most of the vehicles in service produced before World War II.

The majority of domestically produced trams were small, two-axle vehicles, whose design severely limited passenger capacity on growing systems.

In December 1959, the Council of Ministers of the Russian Soviet Federative Socialist Republic appointed Ust-Katav Wagon-Building Plant (UKVZ) to lead the development and eventual mass production for a four-axle, double bogie tram capable of operating as a multiple unit.

The electrical, mechanical, and aesthetic designs were derived from the Soviet RVZ-6, based on the Czechoslovakian Tatra T2, which in turn was a licensed adaptation of the North American PCC tram.

Compared to later variations of the KTM-5, the aesthetic design of the original prototypes featured a streamlined all-steel body, which was also influenced by the recently introduced Tatra T3 and LM-57 trams.

Led by the Institute of Technical Aesthetics in Sverdlovsk, the new tram design featured sharp edges, large windows, and the metal body was replaced with fiberglass paneling.

In December 1968 the modification of the UKVZ plant was completed and the first batch of production model trams were delivered to Omsk in 1969.

[14][8] In the first two years of deployment, the "Ural" trams experienced significant issues and safety problems, mostly electrical and brake failures and a number of fires.

[8] The iconic fiberglass design was susceptible to burning, and a tram could completely burn-out within minutes and emit toxic smoke.

One particular incident occurred in 1971 in Tomsk, in which an undisclosed number of victims died in a tram fire, a majority suffered from chemical poisoning after inhaling the toxic smoke.

The KTM-5M3's modernization only addressed the vehicle's caustic fiberglass exterior, but was still frequently experiencing brake failures, door drive malfunctions, and electrical fires.

In the latter half of the decade, UKVZ improved build quality and operators and mechanics learned the complicated idiosyncrasies of the tram.

On a national level, the Ministry of General Machine Building began to show concern with the outdated tram.

Because the system could accommodate wider vehicles, the only modification needed was standard gauge bogies on the traditional 71-605A tram.

The upgrades features a completely new body with touchscreens for the driver, climate control, lighting, new traction converters and new flooring.