Although Taylorcraft was able to sell a larger number of the side-by-side Model B to the civilian contractors who operated flight schools approved under the program, tandem-seat aircraft were preferred by the military.

To better capture this new training market, Taylorcraft developed the Model D, which took up the tandem seat layout of the earlier Taylor J-2 which Piper's J-3 was patterned after.

After 200 machines were constructed, production was converted to military orders for the Taylorcraft O-57 liaison plane, re-designated L-2 in April 1942.

Taylorcraft tried to utilise as many parts of the Model B as possible, however, this was only partially successful, as the main structural components were not interchangeable between the two patterns and the wing ribs were made of aluminum instead of wood.

In the specifications of the designers John Hutmacher and Cameron Lusty was the requirement for a good all-round visibility, whereupon they lowered the upper strap of the trunk compartment (Longeron) at shoulder level of the pilot.