The Type 97 tankette (or Te-Ke/Ke-Ke) was developed to replace the earlier Type 94 tankette which proved very unreliable in service. Two different prototypes of the Type 97 were built by the Tokyo Motor Industry (later known as Hino Motors), with engines supplies by Ikega. The first prototype was completed in 1937. The original model had the engine and driver at the front, with the turret at the rear, whilst the later model had the engine moved to the rear to facilitate communication between the driver and the gunner. After trials the second model was standardised as the Type 97 tankette, and this entered service with the Japanese Army in 1938.

The Type 97 was the last tankette to be adopted by the Japanese Army as by the start of WWII this type of vehicle has become obsolete. Production of the vehicle continued well into the war, however, and the type was built in larger numbers than any other Japanese tankette. The vehicle had a hull of riveted construction, with the driver at the front on the left, and the commander, who had to load, aim and fire the gun, in the turret located in the centre of the hull. The engine and transmission were at the rear. The suspension consisted of two bogies, each with two wheels, with the drive sprocket at the front and the idler at the rear, and there were two return rollers. Armament consisted of a 37mm gun with a total of 96 rounds of ammunition. Some models were armed with a single 7.7mm gun instead of the gun.

There were a number of variants of the vehicle, including one with the turret removed, engine moved forward and a fully enclosed cargo area at the rear. This model, designed Type 98 So-Da, was used for a wide variety of roles, including that of ammunition carrier, observation post vehicle, barrage balloon mooring vehicle and self-propelled gun with a 37mm or 47mm anti-tank gun mounted at the rear of the hull.

Typically, Type 97s were distributed in pairs to support infantry divisions, where they were very often used as armored tractors and supply vehicles.

Despite various design weaknesses, the Type 97 was successfully used in combat in China during the Second Sino-Japanese War of 1938–1945, as the Chinese National Revolutionary Army had very few tanks or anti-tank weapons to oppose them. Their lightness meant they could be transported easily across the sea or rivers. The Type 97 was first used in combat against the Soviet Union at the Battle of Nomonhan.

With the start of World War II, the Type 97 contributed significantly to the Japanese victories at the Battle of Malaya and the Battle of the Philippines, as its light weight enabled the tank to traverse unsupported bridges and ferry crossing which would be unable to take heavier tanks, and its small size allowed it to travel along the long winding and narrow roads at that time.