It was a further development of the Mikulin AM-35 design. The AM-38 was used on the Il-2 Shturmovik and Il-10 ground attack aircraft.
The AM-38 was installed experimentally in a MiG-3 and tested during August 1941. A slight performance improvement was seen at low-altitude but the engine experienced overheating problems due to the cooling and oil systems remaining unchanged from the AM-35A.