It was designed during the first half of the Second World War in response to a request by the Reichsluftfahrtministerium (German Air Ministry, RLM) for a successor or supplemental transport aircraft to the Luftwaffe's obsolescent Junkers Ju 52/3m.

The Ar 232 introduced, or brought together, almost all of the features now considered to be standard in modern cargo transport aircraft designs, including a box-like fuselage slung beneath a high wing; a rear loading ramp (that had first appeared on the December 1939-flown Junkers Ju 90 V5 fifth prototype four-engined transport via its Trapoklappe), a high-mounted twin tail for easy access to the hold and features for operating from rough fields.

The type demonstrated clear performance advantages over the Ju 52/3m and limited pre-production orders were placed, leading to roughly 20 aircraft being constructed.

What would become the Ar 232 originated from a tender offered by the Reichsluftfahrtministerium (RLM/German Aviation Ministry) issued during late 1939 which sought a replacement for the ubiquitous Ju 52/3m transport.

The basic configuration selected was that of a cantilever mid-wing smooth-skinned monocoque design with a spacious cargo area that was as low to the ground as feasibly possible.

[2] Following a review of the competing aircraft, Arado's design was selected over Henschel's, leading to the company receiving an initial order for three prototypes in 1940.

Eventually, the BMW Bramo 323 Fafnir nine-cylinder radial engine, weighing roughly 550 kg (1,210 lbs) each, from Focke-Wulf's Fw 200 land-based maritime patrol aircraft was selected as the alternate powerplant instead.

[4] The general performance of the Ar 232 proved to outperform the Ju 52/3m in multiple respects; it carried roughly double the load over longer distances, operated from shorter runways and rougher fields if need be, and cruised about 70 km/h (44 mph) faster.

Unlike typical designs of the era that used a side-mounted door for access, the Ar 232 was furnished with hydraulically powered clamshell-doors on the rear of the bay with a ramp, which permitted cargo to be rolled into the hold.

An additional set of eleven smaller, non-retractable twinned wheels per side, mounted along the ventral centreline of the fuselage from just behind the semi-retractable nosewheel aftwards to just forward of the wing's trailing edge, supported the aircraft once the main landing gear's lever-action lower arm had "knelt", or could be used for additional support when landing on soft or rough airfields.

Its crew occasionally opted to avoid airfields when enemy forces were known to be waiting in ambush, instead landing on rough terrain, a feat that would have been impossible for most transport aircraft of its size at the time.

[12] On 17 July 1943, a twin-engined Ar 232 flew from Brandenburg, Germany to Banak, Norway, the northernmost airport in Europe; the flight, which delivered automated weather apparatus, necessitated the fitting of auxiliary fuel tanks.

[13] Outside of conventional military logistics, the Ar 232 found numerous uses; Arado made frequent use of the type to transport high priority aviation components.

[14] Multiple attempts using Ar 232s were made to infiltrate covert agents behind Soviet lines, including a mission under remit of the top secret Operation Zeppelin which intended to assassinate Joseph Stalin in late 1944.

[15] Starting in December 1944, several Ar 232 were directed to fly supplies to a supposed pocket of German military personnel active behind Soviet lines.