The MP35 submachine gun was designed by Theodore Emil Bergmann, the son of the Theodore Bergmann who had manufactured the turn of the century line of Bergmann pistols. Unlike his father, Emil was a firearms designer, and not just a manufacturer. This design was submitted for German military testing in the early 1930s, as the German military began to seriously look for a new SMG. They were initially known as the BMP-32 and BMK-32 (Bergmann Maschinen Pistole and Karabiner; there was both a short barrel and a long barrel version made), and they were produced by Schutz & Larsen of Denmark. In 1934, production moved to the Walther company as the MP34 and MP35, and a number of commercial and international military sales were made, although the German military did not adopt them.

Once World War Two broke out, Walther production capacity was fully occupied with making military arms, and so a license was granted to the Junkers & Ruh company to produce MP35 submachine guns for non-military buyers. These included police units as well as the SS, which was forced to acquire arms from outside the standard Wehrmacht production channels.

Mechanically, the MP35 has a number of interesting features. Most obviously, it feeds from the right side and ejects out the left - virtually all other submachine guns with side-mounted magazines feed from the left. There is no documentation suggesting why Bergmann made this decision, but it was probably due to a different theory of how to most efficiently operate the gun. The MP35 also sort of has a progressive trigger. Firing semiautomatic shots is done by simply pulling the trigger. Firing in fully automatic requires depressing the second lever at the bottom of the trigger, which then allows the trigger to be pulled farther back and full auto fire results. Lastly, the charging handle is set up to replicate the manual of arms of a Mauser bolt action rifle (it is similar in this way to the Mauser G41). While somewhat awkward to use, this does have the benefit of removing the need for an open charging handle slot in the side of the receiver where dirt might enter the action.