Although K1 submachine gun entered service 3 years before the K2, the development of the K2 assault rifle started many years earlier. Facing the eventual expiration of the Republic of Korea's license to produce the M16A1 (Colt Model 603K), president Park Chung-hee, who strongly believed in self-reliance in national defense, ordered the development of an indigenous standard military firearm. Engineers with the Agency for Defense Development began the project named XB rifle in 1972, resulting in the K2 assault rifle in 1983. Colt alleged the design was copied from its M16 and sued unsuccessfully. S&T Motiv does not pay license fees for manufacturing the K2.
The South Korean Army is developing a next-generation rifle to replace the K2, which is expected to be combat-ready by around 2020.
Six different prototypes were made during the XB development. Of the 6 designs, the XB6 was selected. Some parts of the XB6 resembled FN FNC such as the suppressor and sights. Further development of the XB6 evolved into the XB7 and finally the XB7C, also known as the XK2. Externally similar in appearance to the AR18, the K2 uses polymer for the forearm, pistol-grip and side-foldable buttstock. The fire control system and bolt carrier group are derived from the American M16 rifle, but few of the parts, including the bolt and carrier, are interchangeable with the M16. The gas operating system is derived from the AK-47. The K2 uses the same magazine as the M16. The barrel rifling has 6 grooves, 1-in-7.3 right hand twist. The K2 has 3 selective firing modes: semi-auto, 3-round burst, and full automatic.
The K2 can be equipped with the DPI K201, an undercarried 40×46mm single shot grenade launcher patterned after the American M203. The Republic of Korea Armed Forces originally planned to replace the entire K2 with new S&T Daewoo K11 dual-barrel air-burst weapon. However, high cost and skepticism over the effective firepower of the 20mm grenade led to the decision to provide 2 K11s to each squad, keeping 2 grenadiers as well. Consequently, the standard 9-person infantry squad of the Republic of Korea Armed Forces is currently equipped with 2 K2 rifles, 2 K2 rifles with K201 grenade launcher, 2 K11 DAWs, 1 K3 light machine gun, and the rest with either K1 or K2.
The K2 is also sometimes used with bipods and 4x magnification scopes, in a role similar to the Designated Marksman Rifle. A more modern way to accessorize the K2 and K1 is to mount a now (limited) standard issue PVS-4K Rail Integration System. It consists of an aluminum body with a long, uninterrupted rail for optical/red-dot and night-vision sights and three other rails located on the bottom and both sides. The rails are of the Picatinny-type.