Begun by Heinkel under Luftwaffe contract at the beginning of 1936, the first of five variously -powered prototypes flew in the late spring of that year. It was a two-seat, all-metal two-float seaplane of sesquiplane configuration, fitted with a 960-hp DB 600A engine driving a three-blade wooden propeller.
The five prototypes, flown in 1936 and 1937, were powered by a variety of engines, including the 716kW Daimler-Benz DB 600, the 477kW Junkers Jumo 210, the 656kW BMW 132Dc and the 716kW BMW 132K.
These five, and the first of ten pre-production He 114A-0s, were delivered to the Luftwaffe during 1937, with the BMW 132Dc engine, which was adopted also for the 33 He 114A-1 trainers, though they were neither armed nor fitted with catapult hooks. Thirty-three 865-hp BMW-132N-engined A-1s were built as trainers by Weser.
Earlier that year the German aviation ministry accepted the V9 (D-IHDG) as pro-totype for the He 114A-2 series, which were powered by an uprated (960-hp) BMW 132K engine driving a three-blade constant-speed propeller and fitted with catapult gear. It flew for the first time on February 16, 1937 and a small batch of A-2s, again built by Weser, were delivered to the Luftwaffe later in the year. The He 114A-2 was the first operational version, armed with a fixed forward-firing 7.92mm MG 17 machine-gun and an identical weapon mounted in the observer's cockpit.
They were equipped with catapult points and could carry two 50-kg (110-lb) bombs. The Luftwaffe pilots found their handling on the water and in the air to be somewhat unstable, and the He 114 never superseded the He 60 in service. The prewar A-2s were later converted by Weser for export to Sweden (14 as He 114B-1s) and Romania (six He 114B-2 aircraft, three with DB 600 engines and three with Jumo 210s). Romania also bought 12 He 114B-2S with BMW 132K engines.
14 He 114A-2s were exported to Sweden as the He 114B-1.
Fourteen He 114C-1s were used by the Luftwaffe as commerce raiders, and four unarmed C-2s were delivered for use as trainers in December 1939, having the 865-hp BMW 132N engine. At the outbreak of the Second World War, the C- l s and some other models were equipped with one or two additional MG 17 machine-guns in the pilot's cockpit, firing past the propeller. Some He 114s carried four 50-kg (110-lb) bombs for antisubmarine duties (only two when additional machine-gun armament was carried). The He 114 was phased out during the first two years of the war, after limited Luftwaffe service.
Production ceased in 1939.