In 1995, Kawasaki appealed to the Japanese Defense Agency (JDA) to issue funding for the development of a domestically built C-X transport aircraft.

[5] In 2000, the JDA began forming its requirement for the replacement military airlifter; early determinations for the proposed project included that it would be powered by turbofan engines, possess the range to reach Hawaii from Japan, and carry double the payload of the C-130.

[11] They use the same basic wing structure, although it is installed at different sweep angle and dihedral on the two versions, with different high lift devices and powerplant attachments.

[15][16] In May 2003, Ishikawajima-Harima Heavy Industries (IHI) announced its support of General Electric's CF6-80C2L1F engine, having formed an arrangement to locally manufacture the powerplant.

In August 2003, it was announced that the C-X project had passed a preliminary JDA design review, allowing for prototype manufacturing to proceed.

[18] During the construction of the first prototype, there was a problem discovered with some American-made rivets which delayed the roll-out to 4 July 2007 along with its cousin aircraft P-X (since designated as the P-1).

[20] The C-X program was embroiled in further controversy when allegations that bribery had been involved in the purchase of five General Electric CF6-80C2 engines, used to power the aircraft, were made by prosecutors.

In this variant, tentatively designated as the YC-X, little modification is envisioned from the C-2, making use of transferable technologies from the military airlifter, although the intended payload is likely to be increased from the C-2's 26-ton maximum to 37 tons.

[29] On March 20, 2023, Kawasaki representatives said that they are looking into lowering the C-2's production cost, which is a concern both the Ministry of Defense and potential export customers have mentioned to them in the past.

[25][26] The C-2 is being developed to meet the following requirements of the Ministry of Defense: a minimum payload of 26 tonnes, 120 metric ton (264,552 lb 132.275 short ton) take-off weight, ability to takeoff/land on short runways, (Requirement: 500m, almost same as C-1,[31] e.g. Tachikawa—900 m, Kamigoto—800 m, Hateruma—800 m), a maximum payload of 37,600 kg whilst taking off from a 2,300 m Take-off Field Length at a 141 tonnes (310,851 lb 155.42 short ton) take-off weight, ability to fly international airroutes (Requirement: Mach 0.8+; JDA ruled out C-17 as a candidate by its lower cruising speed.

A tactical flight management system and head-up display is installed to reduce the challenges involved in flying at low altitudes or close to mountainous terrain.

[43][44] On 23 August 2021, at the request of the United States, the National Security Council of Japan dispatched one C-2 carrier from Iruma Air Base to assist with the 2021 Afghanistan airlift, following the Fall of Kabul.

[50][51] In response to plans by the Japanese government to lower historic defense export restrictions, Kawasaki began actively promoting the C-2 to foreign customers in 2015.