KhAI-5 was a prototype of the fast photoreconnaissance aircraft. It featured numerous innovations developed for KhAI-1 aircraft, including retractable gear, wing and control surfaces with stressed skin, internal bomb/camera bay, new type of gunner's turret, and remotely controlled camera capable to make shots at 80° relatively to flight direction. Neman's slogan was "No parts in the air flow", so the whole design was very clean.
The KhAI-5 had low, plywood-covered wooden wings. The fuselage was of semi-monocoque construction. The undercarriage retracted into the wings. The crew consisted of two: a pilot and an observer-rear gunner in separate compartments; the observer sat in a turret with one machine gun. In the observer compartment's floor there was an AFA-13 camera for reconnaissance duties. Between the crew compartments there were fuel tanks and a vertical bomb bay. The maximum bomb load was 300 kg/661 lb (6 × 50 kg/110 lb or 10 × 25 kg/55 lb). The plane was powered initially by the M-25A, later M-25V radial engine power: 540 kW (730 hp). The two-blade propeller was made of metal. Armament consisted of 2 x fixed forward firing 7.62 mm (0.300 in) ShKAS machine-guns in the forward top decking and 1 x manually aimed ShKAS machine-gun in the rear turret.
The first prototype of the plane, with a factory designation KhAI-5 (ХАИ-5), flew in June 1936. Despite a lower performance, the aircraft won a contest against another reconnaissance plane design, the Kotcherigin R-9, and was accepted for a production with the military designation R-10 ('R' for razvyedchik - reconnaissance). 493 R-10s had been manufactured in Kharkiv and Saratov aviation plants by early 1940. The first series showed some teething problems, and because of these I. Neman was arrested by the NKVD on December 11, 1938 under false accusation of sabotage and espionage.
In 1938, a variant KhAI-5bis was tested - fitted with an M-25E engine, it developed a speed of 425 km/h (264 mph). In 1938, the KhAI-52 ground attack aircraft, based on the R-10, was also developed. It was fitted with an M-63 670 kW (900 hp) engine and armed with seven machine guns and 400 kg (882 lb) bombs. A production run of an experimental series of 10 aircraft was prepared, but it was cancelled after one was produced and I. Neman had been arrested.
In total over 490 were built.
Some production R-10s were fitted with more powerful Tumansky M-88, Shvetsov M-62 and M-63 engines. Over 60 aircraft, withdrawn from the Air Force, were used from 1940 as mail carriers by Aeroflot, under the designation PS-5 (Russian: ПС-5), with 3 passenger seats.
The aircraft entered service in the Soviet Air Force in 1937, replacing some Polikarpov R-5s. R-10s were first used in combat in the Soviet-Japanese Battle of Khalkhin Gol in 1939. Then, they were used in the initial stage of the World War II, starting with use against Poland in the Invasion of Poland (without combat encounters) and against Finland in the Winter War (1939–1940). R-10s were next used in the first period of the German-Soviet war, following the German attack on June 22, 1941. By this time, they were outdated and suffered heavy losses. They were used as close reconnaissance aircraft, and, in need, also as light attack bombers. Later many were used as night bombers, to avoid losses in encounters with fighters. The remaining R-10s were withdrawn from combat service in 1943 (two Finnish pilots claimed shooting R-10 in 1944).