Division was formed in Würzburg, Bavaria, on 10 November 1938 as the first of a second wave of new armored divisions in Germany following the creation of the original three tank divisions in 1935. Alongside the 4th Panzer Division the 5th was formed at Oppeln, now Opole in Poland, five days later.

Würzburg had previously been the garrison town for the 2nd Panzer Division