The AR-18 has its genesis in the AR-10. I n an effort to develop a less expensive version of that rifle, Armalite created the AR-12, an experimental rifle which used a stamped or bent sheet metal lower receiver in place of the forged AR10 lower. When Armalite sold the AR-15 patents to Colt, they had to stop using Stoner’s gas system, and so the AR-12 was refitted with a short stroke gas system copied form the SVT-40. This design would continue to evolve into the AR-16, a rifle still chambered for 7.62mm NATO, but using stamped construction for both the upper and lower receivers.
To meet the market for a cheaper 5.56mm rifle as a counterpart to the AR-16, Armalite engineer Arthur Miller scaled down the design in 1963/4, creating the AR-18. Armalite was hoping to find both military and commercial contracts for this new rifle, although no military sales would every develop. Armalite themselves built rifles in Costa Mesa (4018 AR-180 semiautomatic rifles and 1,171 AR-18 selective-fire rifles) between 1969 and 1972. In 1966 or 67 they arranged to license the design to the Howa company in Japan, who would make a further 3,927 of them. Shortly after the deal was made, however, the Japanese government restricted arms sales to nations at war, leaving Armalite looking for a new partner. In 1974 the license transferred to Sterling in the UK, who would make 12,362 AR-180s.
The rifle was tested sporadically by the US military between 1964 and 1970, but found to be not as good as the AR-15/M16. Sterling managed to make a few military sales in Africa, but nothing of major quantity. However the AR-18 mechanism would be the basis for many of the rifles in major military service for decades afterwards, including the British L85 and the German G36.