The tank was designed by Professor V. Zaslavsky at a new Tank Bureau set up under the Central Directorate of Military Industries. The thirty-five horsepower truck engine (a copy of the Italian Fiat 15 ter) was supplied by the Moscow AMO Factory, and the gun was a modified copy of the French 37-mm Hotchkiss SA 18. The sprung suspension which would allow a tank to travel faster over rough ground was the biggest improvement over the Renault. A prototype called the T-16 was tested in June 1927, and accepted for production in July with some improvements as the T-18.
Production took place at the Leningrad Obukhov Factory (later renamed Bolshevik Factory), starting in May 1928. The first batch of 30 tanks were found to have serious technical problems. After several stops, production of an improved T-18 with a better forty horsepower engine and added turret bustle proceeded from 1929 to 1931, with a total of 960 tanks built.
A number of experimental designs based on the T-16 and T-18 were tested at the Bolshevik Factory, leading to the T-19 tank with a 90 hp engine in 1931, and the T-20 with a 60 hp engine. The new T2K Tank Design Bureau (later renamed Morozov Design Bureau) at the Kharkov Locomotive Factory used the T-18 as the basis for the new T-24 tank.
An experimental company equipped with T-18s took part in defending the Far Eastern Railway against Manchurian forces in 1929.
The T-18 and its derivatives were essentially unsuccessful designs, but they gave Soviet industry its first experiences in designing armoured vehicles, and in the meantime a number of foreign tank designs were available for production.