The design effort was led by Northrop vice president of engineering and aircraft designer Edgar Schmued, who previously at North American Aviation had been the chief designer of the successful North American P-51 Mustang and F-86 Sabre fighters.
Schmued recruited a strong engineering team to Northrop and assigned them the goal of reversing the trend in fighter development towards greater size and weight in order to deliver an aircraft with high performance, enhanced maneuverability, and high reliability, while still delivering a cost advantage over contemporary fighters.
Recognizing that expensive jet aircraft could not viably be replaced every few years, he also demanded "engineered growth potential" allowing service longevity in excess of 10 years.
Schmued recognized that new jet engine and aerodynamic technology were crucial to these goals, such as the compact but high thrust-to-weight ratio General Electric J85 turbojet engine, and the recently discovered transonic area rule to reduce drag.
 The J85 engine had been developed to power McDonnell's ADM-20 Quail decoy employed upon the Boeing B-52 Stratofortress.
This engine with thrust-to-weight ratios of 6.25 to 7.5 over various versions had a notable thrust per pound advantage over contemporaries, such as the 4.7 thrust-to-weight ratio of the J79 engine used in the F-4 Phantom.

Another highly influential figure was chief engineer Welko Gasich, who convinced Schmued that the engines must be located within the fuselage for maximum performance.
Gasich also introduced the concept of "life cycle cost" into fighter design, which provided the foundation for the F-5's low operating cost and long service life.
A Northrop design study stated "The application of advanced technology was used to provide maximum force effectiveness at minimum cost.
 This became the Northrop philosophy in the development of the T-38 and F-5 lightweight trainer and fighter aircraft."

The F-5 development effort was formally started in the mid-1950s by Northrop Corporation for a low-cost, low-maintenance fighter.
 The company designation for the first design as the N-156, intended partly to meet a U.S. Navy requirement for a jet fighter to operate from its escort carriers, which were too small to operate the Navy's existing jet fighters.
That requirement disappeared when the Navy decided to withdraw the escort carriers; however Northrop continued development of the N-156, both as a two-seat advanced trainer, designated as N-156T, and a single-seat fighter, designated as N-156F.
The N-156T was quickly selected by the United States Air Force as a replacement for the T-33 in July 1956.
On 12 June 1959, the first prototype aircraft, which was subsequently designated as YT-38 Talon, performed its first flight.
By the time production had ended in January 1972, a total of 1,158 Talons had been produced.
Development of the N-156F continued at a lower priority as a private venture by Northrop; on 25 February 1958, an order for three prototypes was issued for a prospective low-cost fighter that could be supplied under the Military Assistance Program for distribution to less-developed nations.
The first N-156F flew at Edwards Air Force Base on 30 July 1959, exceeding the speed of sound on its first flight.

Although testing of the N-156F was successful, demonstrating unprecedented reliability and proving superior in the ground-attack role to the USAF's existing North American F-100 Super Sabres, official interest in the Northrop type waned, and by 1960 it looked as if the program was a failure.
Interest revived in 1961 when the United States Army tested it, (along with the Douglas A-4 Skyhawk and Fiat G.91) for reconnaissance and close-support.
Although all three types proved capable during army testing, operating fixed-wing combat aircraft was legally the responsibility of the Air Force, which would not agree to allow the Army to operate fixed-wing combat aircraft, a situation repeated with the C-7 Caribou.

In 1962, the Kennedy Administration revived the requirement for a low-cost export fighter, selecting the N-
The design effort was led by Northrop vice president of engineering and aircraft designer Edgar Schmued, who previously at North American Aviation had been the chief designer of the successful North American P-51 Mustang and F-86 Sabre fighters. Schmued recruited a strong engineering team to Northrop and assigned them the goal of reversing the trend in fighter development towards greater size and weight in order to deliver an aircraft with high performance, enhanced maneuverability, and high reliability, while still delivering a cost advantage over contemporary fighters. Recognizing that expensive jet aircraft could not viably be replaced every few years, he also demanded "engineered growth potential" allowing service longevity in excess of 10 years. Schmued recognized that new jet engine and aerodynamic technology were crucial to these goals, such as the compact but high thrust-to-weight ratio General Electric J85 turbojet engine, and the recently discovered transonic area rule to reduce drag.  The J85 engine had been developed to power McDonnell's ADM-20 Quail decoy employed upon the Boeing B-52 Stratofortress. This engine with thrust-to-weight ratios of 6.25 to 7.5 over various versions had a notable thrust per pound advantage over contemporaries, such as the 4.7 thrust-to-weight ratio of the J79 engine used in the F-4 Phantom.
Another highly influential figure was chief engineer Welko Gasich, who convinced Schmued that the engines must be located within the fuselage for maximum performance. Gasich also introduced the concept of "life cycle cost" into fighter design, which provided the foundation for the F-5's low operating cost and long service life. A Northrop design study stated "The application of advanced technology was used to provide maximum force effectiveness at minimum cost.  This became the Northrop philosophy in the development of the T-38 and F-5 lightweight trainer and fighter aircraft."
The F-5 development effort was formally started in the mid-1950s by Northrop Corporation for a low-cost, low-maintenance fighter.  The company designation for the first design as the N-156, intended partly to meet a U.S. Navy requirement for a jet fighter to operate from its escort carriers, which were too small to operate the Navy's existing jet fighters. That requirement disappeared when the Navy decided to withdraw the escort carriers; however Northrop continued development of the N-156, both as a two-seat advanced trainer, designated as N-156T, and a single-seat fighter, designated as N-156F.
The N-156T was quickly selected by the United States Air Force as a replacement for the T-33 in July 1956. On 12 June 1959, the first prototype aircraft, which was subsequently designated as YT-38 Talon, performed its first flight. By the time production had ended in January 1972, a total of 1,158 Talons had been produced. Development of the N-156F continued at a lower priority as a private venture by Northrop; on 25 February 1958, an order for three prototypes was issued for a prospective low-cost fighter that could be supplied under the Military Assistance Program for distribution to less-developed nations. The first N-156F flew at Edwards Air Force Base on 30 July 1959, exceeding the speed of sound on its first flight.
Although testing of the N-156F was successful, demonstrating unprecedented reliability and proving superior in the ground-attack role to the USAF's existing North American F-100 Super Sabres, official interest in the Northrop type waned, and by 1960 it looked as if the program was a failure. Interest revived in 1961 when the United States Army tested it, (along with the Douglas A-4 Skyhawk and Fiat G.91) for reconnaissance and close-support. Although all three types proved capable during army testing, operating fixed-wing combat aircraft was legally the responsibility of the Air Force, which would not agree to allow the Army to operate fixed-wing combat aircraft, a situation repeated with the C-7 Caribou.
In 1962, the Kennedy Administration revived the requirement for a low-cost export fighter, selecting the N-
Northrop F-5