In 1981, a new company, Hoffmann Flugzeugbau, was formed in Austria with the aim of becoming a major aircraft manufacturer for general aviation purposes.

[2] During the late 1980s, management at the firm continued to rapidly expand its range of products; it also underwent several changes in name and ownership, eventually becoming Diamond Aircraft.

[2] The Katana has also been developed with a philosophy of offering aircraft that weren't equivalent in terms of performance to any major existing product from competing manufacturers, consciously avoiding instances of direct head-to-head competition.

[4] Originally placed into production in Austria, during the early 1990s, a purpose-built factory was established by Diamond in London, Ontario, Canada to produce the DV20, which was subsequently designated as the DA20.

According to Flight International, it has been considered to be relatively unorthodox amongst trainers, utilising a design that makes heavy use of the manufacturer's prior glider products.

In comparison to traditional trainer aircraft, it has been marketed as substantially reducing the associated fuel and maintenance costs of operation, while providing favourable flight qualities and the necessary range for trainees to gain experience with.

[5] For a time, the Katana was the only two-seat composite training aircraft available that offered both low costs and incorporated advanced technologies, giving it an effective niche in the sector.

[5] The airframe is complete with a sleek finish across the entirety of its exterior, which serves to eliminate corrosion and rivets in order to lower maintenance requirements.

[5] The Katana provides excellent external visibility to its pilots via the use of a one-piece bubble canopy, which is hinged at the rear, enabling easy entry using the built-in steps.

[5] There has been positive reports on the aircraft's comfort, the crew accommodated on fixed-position reclined seats with a small personal stowage area located directly behind; the noise levels are so low that headsets are typically unnecessary for voice communication, although an intercom system is integrated for this purpose.

[18] The aircraft does not feature any instances of vortex generators, wing fences or many other aerodynamic devices, aside from the integral winglets, which positively contribute to roll stability, drag-reduction, and enhanced aileron effectiveness.

[5] Other unfavourable flight conditions are often guarded against, such as a wing drop, which may be produced only as a consequence of prolonged and excessive elevator application during a steep climbing turn, and can be rectified by the relaxation of back pressure.

Variants powered by the Rotax engine have been approved for use with standard automotive gasoline, automotive-grade oil Mobil is also recommended for use as a lubricant.

Doss Aviation, under contract for the United States Air Force, currently operates a fleet of DA-20s at the Pueblo Memorial Airport in the Initial Flight Training (IFT) program.