The Do 27's precursor, the Do 25, was developed by Dornier at the firm's facilities in Spain in order to satisfy a Spanish military requirement that called for a light utility aircraft with short takeoff and landing (STOL) performance.

In addition to domestic sales, a large number of export customers, such as Portugal, emerged for the Do 27, and it had a lengthy service life with some examples still being used into the twenty-first century.

Shortly following the end of the Second World War, Germany's extensive aerospace industry was dismantled and largely dissolved due to the country having been forbidden to either possess or manufacture military aircraft.

[2] German aircraft manufacturer Dornier GmbH managed to retain its independence in the conflict's aftermath, and was keen to resume its aviation activities as soon as permissible.

[5] Dornier opted to develop a new aircraft, designing a monoplane with a high-mounted wing fitted with oversized flaps, a wide wraparound windscreen, a fixed undercarriage and a relatively spacious cabin.

[1] This new aircraft was powered by a single ENMA Tigre G.V; capable of generating a maximum of 110 kW (150 hp), this engine proved to be too weak to achieve satisfactory performance.

Furthermore, the aircraft was offered as a twin-float seaplane, the Do 27S-1; another model proposed was furnished with the larger Lycoming GSO-480-B1B6 engine, capable of generating a maximum of 254 kW/340 hp, which was matched with a three-blade propeller, the Do 27H-2.

The type was extensively used by the German military into the 1980s, gradually being succeeded in its role by increasingly capable helicopters; many ex-German aircraft were subsequently exported and used by other operators.