No sooner than the M48 Patton began being issued to armored units, American engineers already started working on potential improvements to its design. In particular, engineers focused on upgrading the vehicle’s firepower. This in turn, lead to the creation of the T54, a new vehicle based on the M48’s chassis.

Initially, two versions of prototypes were planned, but a lighter and cheaper third one was proposed in 1952. All three versions of the T54 were armed with a modified version of the T5 105mm gun, but featured different turrets and gun loading methods. The T54E1 was the second prototype, equipped with an oscillating turret similar to the ones found on contemporary French tanks, and a drum-fed autoloading mechanism with a capacity of 9 rounds.

By 1957, all three prototype versions had undergone comprehensive testing at Fort Knox and the Aberdeen proving grounds. However, as the interest of the Army shifted towards the more promising T95 project, the decision was made to cancel the T54 project in 1957. A total of less than a dozen T54s were constructed, of which two were T54E1s.