Northrop's first postwar civil design was a three-engined STOL passenger and cargo transport named the Northrop N-23 Pioneer. The Pioneer could carry 36 passengers or five tons of cargo and first flew on 21 December 1946. The aircraft had good performance, but there was little interest due to the availability of cheap war surplus aircraft. The Pioneer was lost in a fatal crash in 1947. In 1948, the United States Air Force expressed interest in an aircraft of the same configuration and placed an order with Northrop for 23 aircraft, 13 troop transports designated the C-125A Raider and 10 for Arctic rescue work designated the C-125B. With the company designation N-32 Raider the first aircraft flew on 1 August 1949.
The aircraft was powered by three 1,200 hp (890 kW) Wright R-1820-99 Cyclone radial engines. The aircraft could also be fitted with JATO rockets that enabled it to take off in less than 500 feet (150 m). The 13 troop transporters were designated YC-125A in-service and the Arctic rescue version the YC-125B.
The Canadian company Canadair considered building the N-23 under licence but did not proceed.
Deliveries of the YC-125 to the USAF began in 1950. These aircraft did not serve long as they were underpowered and they were soon sent to Sheppard Air Force Base, Texas and relegated to be ground instructional trainers until retired in 1955 and declared surplus.
Most of the surplus aircraft were purchased by Frank Ambrose and sold to bush operators in South and Central America.