The Galil was the result of a program to replace the FAL in Israeli service after its somewhat disappointing performance in the Six-Day War of 1967. Israel found that while the FAL had shown reliability problems in the desert, AK rifles ran just fine despite often being badly neglected. In an initial series of tests, captured AK rifles came out superior to M16 and Stoner 63 rifles. This led to a more extensive series of tests and developmental work in which Yisrael Balashnikov developed a number of prototype rifles based on AK actions modified to 5.56mm using Stoner barrels and magazines. This second trial would ultimately compare the M16, Stoner 63, HK33, AR18, Beretta and Steyr rifles, and domestic developments by both Balashnikov and Uziel Gal. The Balashnikov rifles would prove the ultimate winner of the competition.

Balashnikov - whose name being so similar to Kalashnikov through pure coincidence, and who was originally born Mishmar Hayarden in Russia - would change his name to the more Hebrew sounding Yisrael Galili, and the new rifle pattern would be named the Galil after him. While the prototypes had been built on captured Soviet-bloc AKs, the production version would be based on the Finnish Rk-62 Valmet receiver. The Galil featured a great many improvements and additions to the AKM, including much better rear-mounted aperture sights, night sights, integral bipod (on some models), folding stock, ambidextrous safety and bolt handle, folding carry handle, and of course, a bottle opener. The Galil was formally adopted in 1972, but never did completely equip the Israeli Army, as surplus M16 rifles form the US were available for little or no cost. It was phased out by about 2000 and replaced by the Tavor series.

Prior to 1989, semiauto Galil could be imported into the US for commercial sale, and between 7000 and 9000 were brought in by a succession of importers (Magnum Research, Action Arms, and Springfield Armory). A 7.62mm NATO version of the Galil was introduced in 1983, which was not used by the Israeli military but did see adoption by Colombia as well as limited commercial sale in the US. The standard 5.56mm Galil were purchased by an array of foreign militaries including Guatemala, Nicaragua, Estonia, Portugal, and South Africa (where it served as the basis for the domestic production R4 series).