In July 1937, the new Mitsubishi G3M bomber (Allied codename NELL) went into service in China. Only two months later, the Navy issued a specification to Mitsubishi for a NELL replacement. At that time, the requirements were unprecedented for a twin-engine, land-based attack bomber: flying at a top speed of 398 kph (247 mph) and an altitude of 3,000 m (9,845 ft), the new bomber had to fly a distance of 4,722 km (2,933 miles) without a torpedo or equivalent weight in bombs. When carrying an 800 kg (1,768 lb) torpedo or the same weight in bombs, the Navy needed the bomber to fly at least 3,700 km (2,300 mi).

To meet the requirements, a Mitsubishi design team led by Kiro Honjo crafted an airplane called the G4M with fuel tanks in the wings that were not resistant to explosion when punctured during combat. These tanks were much lighter in weight than explosion-proof (also called 'self-sealing') gas tanks. The decision not to incorporate the heavier, safer fuel tanks was necessary to meet the Navy's range requirements. Mitsubishi incorporated this same design feature in the Zero, for the same reasons and with the same results. Both aircraft had unprecedented range but they were also extremely vulnerable to the machine gun and cannon fire from Allied fighter aircraft. The BETTY was so prone to ignite that the Allies nicknamed it the 'flying lighter.'

The fuselage was streamlined but rotund to allow space for a bomb bay within the wing center section and to allow the 7 to 9-man crew to move about. About half the crew were gunners who manned the defensive armament positions. Bomber crews flying the NELL were virtually incapable of defending themselves from concentrated fighter attacks, so Honjo paid special attention to this aspect of the G4M. He incorporated 7.7 mm (.30 cal.) guns in the nose, atop the mid-fuselage behind the cockpit, and on both sides of the fuselage behind the wing. In the tail, he introduced a 20 mm cannon. Although the G4M now had a more potent sting, Honjo again sacrificed crew protection to the Navy's demands for great range. He omitted armour plate.

The first G4M prototype left the factory in September 1939 and made the trek to Kagamigahara Airfield for Mitsubishi's Nagoya plant had no company airstrip. Kagamigahara was 48 km (30 miles) to the north. Japan's newest and most advanced bomber made the trip, disassembled and stacked on five ox-drawn farm carts, over unpaved roads! After arriving at the airfield, the first G4M was reassembled and flown by test pilot Katsuzo Shima on October 23, 1939. Initial results were impressive, but the Navy shelved the bomber for a time in favour of a variant to be called the G6M1. Navy leaders hoped that by increasing the number of defensive cannons, the G6M1 could become a heavy escort fighter for other bombers but this diversion failed to live up to expectations, and the Navy ordered the G4M1 into production. The U. S. Army Air Corps conducted a similar experiment using a modified Boeing B-17 bomber designated the B-40 but this idea too failed to survive operational testing and was soon abandoned. The first production G4M rolled off the line in April 1941. For the remainder of the war, the BETTY assembly line continued to run.

Operationally, BETTY crews achieved much in their first year of combat. They devastated Clark Field, Philippine Islands, on December 8, 1941, and participated in sinking the British battleships HMS "Prince of Wales" and HMS "Repulse" on December 10. They ranged across the length and breadth of the Pacific theatre, attacking targets from the Aleutians to Australia. Against limited fighter opposition, the lack of armour and self-sealing fuel tanks was no hindrance. The savings in airframe weight allowed the G4M to attack targets at unprecedented ranges. But as Allied fighter strength increased, the BETTY began to reveal its fatal vulnerabilities. Admiral Isoroku Yamamoto, architect of the Pearl Harbor attack, died on April 18, 1943, along with his entire staff when U. S. Army Air Corps P-38 Lightnings intercepted and destroyed the two BETTY bombers that carried them. Six escorting Zeros flew guard but in a matter of seconds, the Air Corps pilots shrugged off the escorting fighters and sent both BETTYs crashing down in flames.

As the war dragged, improved bombers failed to materialize so Mitsubishi fielded different versions of the G4M to fulfil new missions, and to eliminate the various weaknesses in the basic design. Front-line combat units operated many variants and sub-variants with different engines and armament packages. The G4M2 was a complete redesign but it did not overcome the airplane's vulnerability to Allied firepower. Mitsubishi tried again to reduce the bomber's tendency to burn. The firm changed the wing to a single-spar configuration and installed self-sealing fuel tanks with a capacity about one-third less than earlier versions. The capacity dropped because of the material inserted in the tank to block leaking fuel when gunfire perforated the tank. Armour plate was also added to all crew positions and the tail turret was redesigned. As a result of these modifications, the fuselage was shortened and the center-of-gravity shifted forward. To re-balance the bomber, dihedral was added to the horizontal stabilizer. This version was called the G4M Model 34.