In the early 1930s Hellmuth Walter had designed a small, high-speed submarine with a streamlined form propelled by high-test peroxide (HTP) and in 1939 he was awarded a contract to build an experimental vessel, the 80 ton V-80, which achieved an underwater speed of 28.1 knots (52.0 km/h; 32.3 mph) during trials in 1940.

Following the success of the V-80's trials, Walter contacted Karl Dönitz in January 1942, who enthusiastically embraced the idea and requested that these submarines be developed as quickly as possible.

The other pair of Type XVIIA submarines, U-794 and U-795, designated Wk 202, were constructed by Friedrich Krupp Germaniawerft, Kiel.

[6] The Type XVIIA submarines were found to be very hard to handle at high speed, and were plagued by numerous mechanical problems, low efficiency, and the fact that a significant amount of power was lost due to increased back pressure on the exhaust at depth.

[8] A projected Type XVIIK would have abandoned the Walter system for closed-cycle Diesel engines using pure oxygen from onboard tanks.

[2] All three completed Type XVIIB boats were scuttled by their crews at the end of World War II, U-1405 at Flensburg, and U-1406 and U-1407 at Cuxhaven, all in the British Zone of Occupation.