For a couple decades after World War Two, Walther survived on legacy designs - the PP/PPK and P38 (eventually made with an aluminum frame as the P4) primarily. In the 1970s they developed the P5 for German police use, and this was a reasonably successful pistol, but expensive and complex. Something more modern was needed to keep the company relevant in the market. The first attempt was an all-steel Browning style pistol, the P88. This was put into production, but was never very popular. Next was an attempt to recreate the PP in 9x19 with a locked breech, the PP90. This was a complete failure, never getting past prototype stage. And by this time the company was essentially bankrupt, and was put up for sale.

German airgun manufacturer Umarex came to the rescue, wanting to see a historic German company remain underGerman ownership. They purchased the firm, and a new R&D effort led to the release of the P99 in 1996. This was a truly cutting edge pistol at the time, with a polymer frame, interchangeable backstraps (the first production pistol of its type to have this feature), ambidextrous controls , and a remarkably good DA/SA striker firing system with a decocking button. With company manager Wulf-Heinz Pflaumer putting a preproduction example into the hands of James Bond (Pierce Brosnan) in "Tomorrow Never Dies", the gun got off to a hot start, and proved very successful, rescuing the company from financial disaster.

Over about 25 years of production it was licensed to several additional manufacturers (including S&W and Radom), made in a variety of colors, trigger styles, and calibers, and not finally discontinued until 2023.