On 4 November 1981, the aircraft was launched with ATR, as a joint venture between French Aérospatiale (now part of Airbus) and Aeritalia (now Leonardo S.p.A.).

During the 1960s and 1970s, European aircraft manufacturers had, for the most part, undergone considerable corporate restructuring, including mergers and consolidations, as well as moving towards collaborative multinational programmes, such as the newly launched Airbus A300.

In line with this trend towards intra-European co-operation, French aerospace manufacturer Aérospatiale and Italian aviation conglomerate Aeritalia commenced discussions on the topic of working together to develop an all-new regional airliner.

Prior to this, both companies had been independently conducting studies for their own aircraft concepts, the AS 35 design in the case of Aerospatiale and the AIT 230 for Aeritalia, to conform with demand within this sector of the market as early as 1978.

[2] By the end of 1986, the ATR 42 had accumulated a sizable backlog of orders, which in turn led to a ramping up of the type's rate of production.

[6][7] To maintain a technological edge on the highly competitive market for regional airliners during the 1990s, several modifications and improved versions of the ATR 42 were progressively introduced.

[4] Performing its maiden flight on 16 September 1994, and awarded certification by the British Civil Aviation Authority and France's DGCA during July 1995;[4] the -500 model was an upgraded aircraft, equipped with new PW127 engines, new six-bladed propellers, improved hot and high performance, increased weight capacity, and an improved passenger cabin.

On 31 October 1995, the first ATR 42-500 was delivered to Italian operator Air Dolomiti; on 19 January 1996, the first revenue service to be performed by the type was conducted.

[2] On 3 October 2003, ATR became one of the first aircraft manufacturers to be certified under ISO 9001-2000 and EN/AS/JISQ 9100, the worldwide quality standard for the aeronautics industry.

During July 2004, ATR and Brazilian aircraft manufacturer Embraer announced a cooperation agreement on the AEROChain Portal for the purpose of delivering improved customer service.

[12] As a consequence of strong demand for the -600 series, ATR decided to invest in the establishment of a second, more modern final-assembly line and acquisition of more hangar space at their Toulouse site, along with a new large completion and delivery area; overall, the manufacturing operation expanded to four times the footprint that it had in 2005.

[6] During 2017, a new in-house financing and leasing division was established by ATR to offer customers a greater degree of support and expand the company's range of services.

[6][13] During the late 2010s, ATR conducted a feasibility study into developing the ATR 42's short takeoff and landing (STOL) capabilities, potentially enabling the type to make use of runways as short as 800 m (2,625 ft) via the adoption of enhanced brakes and a drastically modified tail unit; the company viewed this measure as expanding the aircraft's potential and opening new sales possibilities.

[14] Existing control surfaces would be re-engineered with takeoff flaps extended to 25°, and both spoilers deploying at landing and not only for inflight turns, adding an autobrake system, while the rudder is modified to increase its maximum deflection and the vertical stabilizer's size is increased, to counter an engine failure, lowering the minimum control speed.

[15] ATR estimates a market for STOL 20–42 seaters of 800 over 30 years, to serve islands and deliver cargo to short runways.

[21][22] The ATR 42 is a straight high-wing airliner with twin turboprops and a T-tail, certified in the transport category, and powered by Pratt & Whitney Canada PW120s.

It has deicing boots to fly in icing conditions and a retractable landing gear in fairings under the fuselage, with wheel sides visible in flight.

On 5 June 1998, Tarom, the national carrier of Romania, accepted delivery of its first two ATR 42-500s, of a batch of seven aircraft ordered a year earlier.

[24] According to ATR's CEO Filippo Bagnato, sales had continued to grow during the Great Recession despite the downturn experienced by most aviation companies as "fuel consumption that can be half that of the alternatives and [with] lower maintenance costs".

[4] By 2013, while the Asia Pacific region had comprised the majority of ATR's sales when geographically ranked, but orders from Chinese airlines remained elusive; Bagnato ascribed this anomaly to local market conditions dictating the typical use of larger aircraft, as well as a Chinese government policy of imposing high tariffs on the import of foreign-built, fixed-wing aircraft.

[13] During late 2014, ATR set up a new office in Beijing, and hired several former Airbus sales personnel with the aim of launching the type on the Chinese market.

[26] Both conversions involve complete stripping of furnishings along with the addition of floor strengthening, new window plugs and 9 g restraining nets, six additional longitudinal tracks for added flexibility, and an E-Class cabin; the ULD model can accommodate standard ULD-packaged cargo, such as LD3 containers or 88x108in (2.2x2.7m) pallets, which were loaded via a large cargo door located on the port forward side.

Undertaken by a range of companies, such as Alenia subsidiary Aeronavali, Texas-based M7 Aerospace; French firms Indraéro Siren and Aeroconseil, Canadian Infinion Certification Engineering, and Spanish company Arrodisa, by October 2012, in excess of one-fifth of all first-generation ATR 42 and ATR 72 aircraft had already been converted to freighters.

[26] During January 2017, Japanese regional airliner Japan Air Commuter (JAC) has taken delivery of its first ATR 42-600, becoming the first owner-operator of the type in the nation.

The only two civilian ATR 42-400s produced (msn 487 and 491) were delivered to CSA Czech Airlines in 1995/1996 as an interim upgrade prior to delivery of -500s.

It has many improvements for performance and passenger comfort, including new engines, new propellers, a newly designed cabin, and increased weight.

It has six-bladed propellers powered by PW127E engines rated at 2,400 shp (1,800 kW) for improved hot and high performance and increased cruise speed.

On 1 August 2017 Silver Airways placed orders for 20 ATR 42-600 aircraft, marking the entry of the -600 into the U.S. market,[35] with four in service as of fourth quarter 2019.