It was designed in response to aRLM requirement for aHeimatschutzjäger - a light fighter aircraft suitable for purely defensive duties and which would have a secondary role as an advancedtrainer for fighter pilots. Although it was not strictly a requirement of the specification, firms submitting designs were urged to use amonoplane layout.
During trials in 1934, the He 74 outperformed its competitors, but in the end, the RLM awarded it third place, behind theFocke-Wulf Fw 56 andArado Ar 76, believing that since the fighters then being developed were all monoplanes, this configuration was essential for an advanced trainer as well.