Development of the AMX-32 began in 1975 as a private venture of AMX, in hopes of attracting the interest of foreign customers, which are already using the AMX-30. The new vehicle was intended to offer better protection than the base model, in addition to several other improvements in various areas in order to spark the interest of international customers.

The first prototype of the AMX-32, fitted with a 105mm gun, was unveiled in 1979, followed soon after by the presentation of the second prototype in 1981, armed with a 120mm cannon. However, despite the improvements offered over the base model, the AMX-32 attracted no interest from neither foreign customers nor from the French military, the latter of which more favored the notion of modernizing its existing fleet of AMX-30s, rather than procuring a new vehicle.

After only a handful of prototypes were built, further development was soon afterwards cancelled due to lacking interest. However, although the AMX-32 never became a success itself, many of the features that it incorporated and experiences gained during its construction were carried over the subsequent projects, such as the AMX-40 and modernization projects of its predecessor - the AMX-30.