However, due to the limited access for outward viewing of its single-personnel turret, as well as its insufficient mobile capability when accompanying tanks, the design was rejected by the US Army. Without funding, FMC had to carry on the development of this vehicle as a private venture. By 1970, a prototype of AIFV, which was converted from the M113A1, was completed.

Similar to the original M113, the chassis of AIFV was also made from welded aluminum. Following the practice of M113A2, however, the fuel tanks of AIFV were relocated to the external rare in order to reduce damage caused by mines. For better protection, FMC-patented applique armor was added to the front as well as both sides, which not only provide better protection for the vehicle, but also improved its floating capability. On the roof a single-personnel turret is located in the middle-upper right, mounting a 25mm cannon and a co-axial 7.62 mm machine gun, and a personnel exit hatch was retained on the upper left. There are two firing ports on each of the sloped sides of the personnel cabin for the carried personnel to fire their individual weapons without the need the leave the vehicle. In addition to the standard vehicle, there are also other variants including TOW missile launcher, armored ambulance, and armored recovery vehicle.

The Dutch Army placed an order of 880 AIFVs in 1973 to replace their aging APCs. These vehicles entered Dutch service in 1977 and were renamed the YPR765. The AIFV also serves with the armor units of Belgium, the Philippines, Egypt and Turkey.