When the Allies occupied German at the end of World War Two, the Walther factory at Zella Mehlis was initially garrisoned by American soldiers (who did a pretty thorough job liberating all the guns they could find there) but eventually ended up in the Soviet occupation zone (and later East Germany). This was in Suhl, a major area of weapons production, and the DDR set up a large factory complex of its own there called the Ernst Thalmann Werke (named after a German communist martyr).
In 1947 a team of engineers started to rebuild the production line for the Walther PP from the tooling and drawings that remained at the Walther plant. The government wants to use pistol for both military, police, and security service. The factory code was 1001, and the pistol was given the designation 1001-0. It took several years to fully reconstruct the production facilities, and once it did production ran from 1953 until 1957 (when the Makarov took over), with about 20,000 produced overall.