Starting in 1965 the US Army commenced a series of trials for prototypes of various Infantry Fighting Vehicle (IFV) after realizing the difficulty of the existing Armoured Personnel Carriers (APCs) for the carried infantrymen to aim and fire their individual weapons from there vehicles. By 1967, FMC completed two XM765 prototypes for trails. However, due to the limited access for outward viewing of its insufficient mobile capability when accompanying tanks, the design was rejected by the US Army. without funding, FMC had to carry on the development of this vehicle as a private venture. By 1970 a prototype of AIFV which was Converted from the M113A1 was completed.

Similar to the original M113, the chassis of AIFV was also made from welded aluminium. Following the practice of M113A2 the fuel tanks were relocated externally to reduce damage from mines. Better protection was applied using applique armour, which was added to the front and sides. This helped with its floating capability. The single person turret mounts a 25mm cannon and a 7.62mm machine gun.