The project developed to mount the same 75mm armament as the M4 Sherman while retaining the light weight and maneuverability of the M3 Stuart; however, during development the weight of the prototype surpassed the US Army's standard for light tanks and crossed into the medium tank category and was renamed.

[3] The M7 had significantly less armor than the M4 Sherman, no greater firepower, and held only a slight advantage in top speed.

In January 1941, the Armored Force prepared a list of characteristics for a new light tank weighing 14 short tons (13 t) armed with a 37mm gun protected by up to 38 mm (1.5 in) of armor and with a "low silhouette" which was passed to Ordnance Department with building of two pilot vehicles carried out by Rock Island Arsenal.

[1] Test revealed that the produced vehicles were heavier than anticipated at 28 to 29 short tons (25 to 26 t) fully stowed.

Six of the production tanks were then modified to use the lightest castings possible and their power trains were revised to improve performance.