Moving the production lines to the more easily mass producible P38 once World War II started took longer than expected, leading to the P08 remaining in production until September 1942 and copies remained in service until the end of the war.

The P38 concept was accepted by the German military in 1938 but production of prototype ("Test") pistols did not begin until late 1939.

Walther began manufacture at their plant in Zella-Mehlis and produced three series of "Test" pistols, designated by a "0" prefix to the serial number.

Besides a DA/SA trigger design similar to that of the earlier Walther PPKs the P38 features a visible and tactile loaded chamber indicator in the form of a metal rod that protrudes from the rear of the slide when a round is chambered.

[9] The moving-barrel mechanism is actuated by a wedge-shaped hinged locking piece underneath the breech.

The slide continues its rearward movement on the frame, ejecting the spent case and cocking the hammer before reaching the end of travel.

The hinged locking piece assisted breechblock design provides good accuracy due to the in-line travel of the barrel and slide.

The first of the new P38s were delivered to the West German military in June 1957, some 17 years and two months after the pistol had initially seen action in World War II, and from 1957 to 1963 the P38 was again the standard sidearm.

Starting in June 1975, the aluminum frame was reinforced with a hex bolt above the trigger guard, and a slightly modified, stronger slide design was introduced.

An improved version of the P38, the Walther P4, was developed in the late 1970s and was adopted by the police forces of South Africa, Rhineland-Palatinate and Baden-Württemberg.