The PC-7 is based on the earlier piston-powered Pilatus P-3. The first prototype, modified from the prototype P-3 by replacing its Lycoming O-435 engine with a Pratt & Whitney PT6A-20 turboprop, flew on 12 April 1966, but after a crash the PC-7 programme was shelved.
In 1973, the programme was restarted and another P-3 was obtained from the Swiss Air Force. After modification, this aircraft flew on 12 May 1975. Further extensive modifications followed later in the programme, including a new one-piece wing with integral fuel tanks, an altered tailfin and a bubble canopy.