The Reich Air Ministry ordered the aircraft to replace the Junkers Ju 88 and Dornier Do 217 bombers by 1943. Four manufacturers submitted plans to the Air Ministry, which chose the Arado design. The engines were positioned in a unique twin-boom arrangement connected through the wing assembly, a set-up which offered the pilot better visibility.
The Arado E.340 had a central fusulage that was build to hold 4 crew members. The cockpit and bomb bay were glazed and pressurized. The mounts for the Juno engines and landing gear were on the wings. The tail of the aircraft had a unique design where it doesn't extend through the plane's central area. The wings were connected at the plane's main body, but not at the tail. This provided the gunners with a clear range of fire towards the rear of the plane. Also, the fuselage extended far beyond the engines both at the front and rear of the plane to give the crew members in the fuselage more visibility. The gunners were located on the rear of the engine and fuselage. The MG 151 cannons that they used were controlled with periscopic aiming. There were also two remote controlled EDL 131 13mm guns placed above and below the fuselage.
The Junkers Jumo 222 engine was chosen to power the aircraft. These powerful engines were selected because it allowed the Arado E.340 to carry a heavier payload without sacrificing too much of the plane's maximum range. They would have allowed the Arado E.340 to carry a payload of over 13,000 lbs. This decision caused the project to suffer due to the lack of engines being produced, and the amount of high grade fuel needed to power them. Ultimately, the entire project was cancelled.