In 1937, the Imperial Japanese Navy drew up a specification for a 12-shi primary floatplane trainer to replace its Yokosuka K4Y or Navy Type 90 Primary Seaplane Trainer. The specification was issued to the established builders of aircraft for the Navy, Kawanishi and Watanabe and to the relative newcomer Nihon Hikoki (also known as "Nippi"). The specification required use of the same Gasuden Jimpu radial engine used by the K4Y, and the three designs showed little changes from the aircraft they were to replace.
Kawanishi's design, which was given the short designation K8K1, was, like the other two designs, a single-engine biplane with a fabric-covered steel-tube fuselage and a wooden wing, with two floats. The trainee and instructor sat in individual open cockpits. The first of three prototypes made its maiden flight on 6 July 1938 was handed over to the Navy for testing in August that year. Nippi's submission (the K8Ni) was disqualified from the competition because it was completed too late, and the K8K was found to be much better than the K4Y which it was intended to replace. It was selected in preference to Watanabe's Watanabe K8W and placed in production as the Navy Type 0 Primary Seaplane Trainer. After 12 more aircraft had been built, however, production was stopped, as the Navy had decided to use the more powerful Yokosuka K5Y to carry out primary floatplane training.