It was designed with the German police forces in mind, who sought to replace existing 7.65mm pistols with a modern service sidearm incorporating enhanced safety features and chambered in 9×19mm Parabellum.

A subsequent bid resulted in the Walther P5 being introduced into service alongside the SIG Sauer P225 (designated P6 within the West German Federal Police) and Heckler & Koch P7.

Walther engineers decided to use the P1 model as the basis of the P5 and gave it a similar locking system, reinforced frame, and dual recoil springs.

Safety was enhanced by utilizing an innovative pivoting firing pin that can move forward only when the trigger is pulled.

Due to pricing, the SIG Sauer P225 generally outbid the Walther P5 in the domestic law enforcement sales.

An unknown variant of the Walther P5 was utilized by the 39th Special Forces "Detachment A" of the US Army, which was part of the Berlin Brigade during the Cold War.