Given the Lockheed designation Model 11, the XFM-2 was developed in response to a United States Army Air Corps requirement for a heavy, twin-engined "bomber destroyer". Originally designated XPB-3 in the 'pursuit, biplace' category, it was redesignated 'XFM-2', for 'fighter, multiplace' early in development. Intended to be powered by two Allison V-1710 supercharged engines, the aircraft was designed for an armament of two 37mm cannon, one mounted in a nose turret and the other in a dorsal turret behind the cockpit.
The XFM-2 featured a tricycle landing gear configuration, and was a mid-wing monoplane of nearly medium bomber size. The empennage featured a twin-tail arrangement. Although the XFM-2 design was evaluated favorably by the Air Corps, the Bell YFM-1 Airacuda was selected to fill the bomber destroyer requirement, and further work on the XFM-2 was abandoned.