Arado Flugzeugwerke was originally established as the Warnemünde factory of the Flugzeugbau Friedrichshafen firm. With its parent company, it ceased operations following the First World War when restrictions on German aviation were created by the Treaty of Versailles. In 1921, the factory was purchased by Heinrich Lübbe, and in 1924 re-commenced aircraft construction for export, opening a subsidiary, Ikarus, in Yugoslavia. Walter Rethel , previously of Kondor and Fokker was appointed head designer.

In 1925, Lübbe re-named the company Arado Handelsgesellschaft ("Arado trading firm") but in 1933 when the new Nazi government re-established aviation in Germany, changed this to the more specific (and accurate) Arado Flugzeugwerke GmBH. Just prior to this, Walter Blume , formerly of Albatros replaced Rethel.

Arado achieved early prominence as a supplier to the Luftwaffe with the Arado Ar 66 , which became one of the standard Luftwaffe trainers right into World War II. The firm also produced some of the Luftwaffe's first fighter aircraft, the Ar 65 and Ar 68. In 1936, the RLM (Reichsluftfahrtministerium - "Reich Aviation Ministry") insisted that, as a show of loyalty, Lüsse should join the Nazi party. When he refused, the Arado company was nationalised and placed under the direction of Erich Serno and Felix Wagenführ .

As Germany entered World War II, two more Arado products rose to prominence, the Ar 96 which became the Luftwaffe's most used trainer, and the Ar 196 a reconnaissance seaplane that became standard equipment on all larger German warships. Unfortunately for Arado, most of their other designs were passed over in favour of stronger products from their competitors. Perhaps Arado's most celebrated aircraft of the war was the Ar 234, the first jet-powered bomber. Too late to have any real effect on the outcome of the conflict, it was nevertheless a sign of things to come.

In 1945, the company was liquidated and broken up.

The Ar 96 continued to be produced by Zlin for many years after the war.

Arado aircraft include:

• Arado Ar 64 , fighter (biplane)
• Arado Ar 65 , fighter/trainer (biplane - re-engined Ar 64)
• Arado Ar 66 , trainer + night fighter
• Arado Ar 67 , fighter (biplane) (prototype)
• Arado Ar 68, fighter (biplane)
• Arado Ar 69 , trainer (biplane) (prototypes), 1933
• Arado Ar 76 , fighter (biplane) + trainer
• Arado Ar 80, fighter (prototype)
• Arado Ar 81 , two-seat biplane (protptype)(1936)
• Arado Ar 95 , coastal patrol + attack (biplane seaplane)
• Arado Ar 96 , trainer
• Arado Ar 196, ship-borne reconnaissance + coastal patrol (seaplane)
• Arado Ar 197 , naval fighter (biplane - derived from Ar 68)
• Arado Ar 198 , reconnaissance
• Arado Ar 199 , seaplane trainer
• Arado Ar 231, fold-wing U-boat reconnaissance aircraft (prototype)
• Arado Ar 232, transport
• Arado Ar 233 , seaplane(concept), 1940
• Arado Ar 234 Blitz ('Lightning'), bomber (jet-engined)
• Arado Ar 240, heavy fighter + attack
• Arado Ar 396 , trainer
• Arado Ar 440 , heavy fighter + attack
• Arado Ar 532 , cancelled transport

List of Major Internal Projects of the WW2 Era under the RLM:

• E.240
• E.300
• E.310
• E.340
• E.370
• E.371
• E.375
• E.377
• E.377a
• E.380
• E.381/I
• E.381/II
• E.381/III
• E.385
• E.390
• E.395
• E.396
• E.401
• E.430
• E.432
• E.433
• E.440
• E.441
• E.470
• E.480
• E.490
• E.500
• E.530
• E.532
• E.555
• E.560
• E.561
• E.580
• E.581.4
• E.581.5
• E.583
• E.625
• E.632
• E.651
• E.654