In 1945, preliminary design began on Allison's first turboprop engines. One was the T40 (Allison Model 500), which consisted of two T38 power sections driving co-axial contrarotating propellers through a reduction gearbox. The objective of this Navy program was to obtain a power plant of increased range for heavy sea planes and fighters, with one unit cut out for cruise economy.

The T40 was used by the Navy in several experimental aircraft. The first of these was the Convair XP5Y-1, initially flown in 1950, and ultimately canceled because of high costs and aircraft in-flight instability. The T40 was also selected for two Navy competitive prototype VTOL aircraft, the Lockheed XFV-1 Pogo Stick and the Convair XFY-1 Pogo. It was also tested briefly in the Douglas A-2D Skyshark.

Operational requirements were for the Convair XP5Y-1, North American XAJ-2, and XP4X-2. A close-coupled version, the XT40-A-6, was for the Douglas XA2D-1. Approximately 240 T40s were built.