Three designs were proposed, a modernized, upgraded version of AT-3 branded as the AT-3 MAX, an evolution of the AIDC F-CK-1 Ching-Kuo combat aircraft to be called the XAT-5, or the Italian Alenia Aermacchi M-346 Master.

[8] In 2017 it was announced that the XAT-5 had won the tender with development and production to be undertaken by a partnership of AIDC and the National Chung-Shan Institute of Science and Technology with delivery scheduled to begin in 2026.

Taiwanese citizens were invited to submit a name with a short proposal with the winner receiving a NTD 30,000 prize.

It has been reported that the aircraft was designed from the beginning to serve dual peacetime training and wartime combat roles.

[16] In 2019 Jane's reported that a light fighter AT-5 variant was planned to replace the Northrop F-5E/F Tiger II fleet.

Both engines failed, and the sole occupant parachuted to safety as the aircraft crashed into the sea five nautical miles from Taitung City.

The ROCAF grounded the T-5 fleet and began an investigation as pilot Lin Wei was treated at Mackay Memorial Hospital's Taitung Branch.