The design of the initial version began in 1935. It was powered by a 700 hp (520 kW; 710 PS) Pratt and Whitney XR-1535-66 double row air-cooled radial engine and had hydraulically actuated perforated split flaps or "dive-brakes" and a landing gear that retracted backwards into fairing "trousers" beneath the wings. The perforated flaps were invented to eliminate tail buffeting during diving maneuvers.
The next iteration of the BT, the XBT-1, was equipped with a 750 hp (560 kW; 760 PS) R-1535. This aircraft was followed in 1936 by the BT-1, powered by an 825 hp (615 kW; 836 PS) R-1535-94 engine. One BT-1 was modified with a fixed tricycle landing gear and was the first such aircraft to land on an aircraft carrier.
BT-1 of VB-5 in 1938
The final variant, the XBT-2, was a BT-1 modified to incorporate landing gear which folded laterally into recessed wheel wells, leading edge slots, a redesigned canopy, and was powered by an 800 hp (600 kW; 810 PS) Wright XR-1820-32 radial. The XBT-2 first flew on 25 April 1938 and after successful testing the Navy placed an order for 144 aircraft. In 1939 the aircraft designation was changed to the Douglas SBD-1 with the last 87 on order completed as SBD-2s. By this point, Northrop had become the El Segundo division of Douglas aircraft, hence the change.
The U.S. Navy placed an order for 54 BT-1s in 1936 with the aircraft entering service during 1938. BT-1s served in USS Yorktown and Enterprise. The type was not a success in service due to poor handling characteristics, especially at low speeds, "a fatal flaw in a carrier based aircraft." It was also prone to unexpected rolls and a number of aircraft were lost in crashes.