On October 15th of 1935, first three Panzer Divisions were formed. General-Colonel Maximilian von Weichs commanded 1st Panzer Division with headquarters in Weimar, 2nd Panzer Division was commanded by Colonel Heinz Guderian with headquarters in Wurzburg and General-Colonel Ernst Fessmann commanded 3rd Panzer Division with headquarters in Berlin. Each division had one Panzer Brigade composed of two tank regiments with two abteilungs (battalions) each along with other units. Each battalion had four companies with 32 light tanks (PzKpfw I and II) each. Entire brigade had 561 tanks including command tanks.
1st Panzer Division also known as 1st Panzer Brigade was composed of 1st Panzer Regiment stationed in Erfurt and 2nd Panzer Regiment stationed in Eisenach. This division was also composed of 1st Motorized Brigade (with two battalions), 1st Motorcycle Brigade, 4th Reconnaissance Company, 37th Artillery Regiment and 37th Communications Company. 2nd Panzer Division also known as 2nd Panzer Brigade was composed of 3rd Panzer Regiment stationed in Kamenz and 4th Panzer Regiment stationed in Ohrdruf. This division was also composed of 2nd Motorized Brigade (with two battalions and 2nd Motorcycle Battalion), 5th Reconnaissance Company and 74th Artillery Regiment (with two battalions).3rd Panzer Division also known as 3rd Panzer Brigade "Berlin" was composed of 5th Panzer Regiment "Wundsdorf" stationed in Wunsdorf and 6th Panzer Regiment (later known as "Neuruppin") stationed in Zossen. This division was also composed of 3rd Motorized Brigade "Eberswalde" (with 3rd Motorcycle Battalion "Freiewalde"), 3rd Reconnaissance Company and 75th Artillery Regiment "Eberswalde".In 1936, 3rd Panzer Regiment was moved to Bamberg, 4th Panzer Regiment to Schweinfurt and 6th Panzer Regiment to Neuruppin.
In February and March of 1936, all panzer units took in extensive training exercises on proving grounds at Staumuhlen in preparation to act as reserves during the German re-occupation of Rhineland. Following the re-occupation on March 7th of 1936, all units returned to their previous locations.
In autumn of 1936, two new panzer regiments were formed, 7th Panzer Regiment in Vaihingen and 8th Panzer Regiment in Boeblingen. 7th Panzer Regiment was attached to 1st Panzer Division and 8th to 3rd Panzer Division. In 1936, it was also decided to form new 4th Panzer Brigade composed of new regiments in addition to existing 1st (1st and 2nd Pz.Reg.), 2nd (3rd and 4th Pz.Reg.) and 3rd (5th and 6th Pz.Reg.).
From September 14th to 29th of 1937, large scale maneuvers of panzer units took place around Neusterlitz. The units involved were 3rd Panzer Division and 1st Panzer Brigade (1st and 2nd Pz.Reg). On October 12th of 1937, number of new units was formed including 10th, 11th, 15th and 25th Panzer Regiments, Panzer Abteilung 65 along with Panzer Lehr Abteilung. 11th Panzer Regiment and Panzer Abteilung 65 were assigned to the 1st Light Division and later to the 6th Panzer Division formed in Wuppertal in October of 1939. 25th Panzer Regiment was assigned to the 2nd Light Division and later to the 7th Panzer Division formed in Gera in October of 1939. 10th Panzer Regiment was assigned to the 3rd Light Division and later to the 8th Panzer Division formed in Cottbus in October of 1939.
In early 1938, new commanders took over existing divisions, 1st Panzer Division was now commanded by General-Colonel Rudolf Schmidt, 2nd Panzer Division by General-Major Rudolf Veiel and 3rd Panzer Division by General-Colonel Grey von Schweppenburg. On March 12th of 1938, Anschluss took place. The only panzer unit taking part was 2nd Panzer Division under command of General Guderian. In preparation for the operation, SS Regiment "Leibstandarte Adolf Hitler" commanded by Sepp Dietrich was attached to 2nd Panzer Division. The division covered some 700 kilometers in 48 hours, while losing 30% of its tanks due to breakdowns. 2nd Panzer Division was not involved in any combat. Following Anschluss, Panzer Abteilung 33 was formed from Austrian Panzer Battalion and members transferred from German units. This unit was stationed in St.Polten. Panzer Abteilung 33 was assigned to the 4th Light Division and later to the 9th Panzer Division formed in Vienna in January of 1940. The headquarters of 2nd Panzer Division remained in Vienna, while 3rd and 4th Panzer Regiments were stationed near the city at Modling and Korneuburg.On October 3rd/4th of 1938, Germany took over Sudetenland according to the Munich agreement from September of 1938. By October 10th, the take over was completed. The only panzer unit involved was 1st Panzer Division.
In November of 1938, Heinz Guderian was promoted to General der Panzertruppen and received his most important assignment, which well may have changed history – he became Chef der Schnellen Truppen (Chief of fast Troops). It meant that Guderian was responsible for recruiting, training, tactics and technique of all the Wehrmacht’s motorized and armored units.
By November 10th of 1938, six new panzer units were formed. New units included two new panzer divisions, 4th Panzer Division (also known as 7th Panzer Brigade) formed on October 10th of 1938 at Wurzburg and 5th Panzer Division (also known as the 8th Panzer Brigade) formed on October 25th of 1938 at Oppeln (Opole). Also formed were 4th Panzer Brigade at Stuttgart, 5th Panzer Brigade at Bamberg, 6th Panzer Brigade at Wurzburg and 8th Panzer Brigade at Sagan (Zagan). In addition, 23rd, 31st, 35th and 36th Panzer Regiments were formed along with Panzer Abteilung 65, 66 and 67. 4th Panzer Division had 7th Panzer Brigade, composed of 35th and 36th Panzer Regiments and was commanded by General-Major Georg Hans Reinhardt. 5th Panzer Division had 8th Panzer Brigade, composed of 15th and 31st Panzer Regiment and was commanded by General-Lieutenant Heinrich Vietinghoff-Scheel. Panzer Abteilung 65, 66 and 67 were respectively assigned to the 1st, 2nd and 3rd Light Division.
Each Panzer Abteilung had four light companies. Each company had command platoon and commander’s platoon (with 5 tanks – 1 PzKpfw II and 4 PzKpfw I and later 3 PzKpfw II and 2 PzKpfw I). Each company had three more platoons with similar structure as commander’s platoon.
In March of 1939, Germany took over the remaining part of Czechoslovakia. The only panzer unit involved was 3rd Panzer Division. Elements of the division reached Prague at 8.20am on March 13th of 1939, followed 6th Panzer Regiment in the afternoon. On March 15th, first parade of German tanks in Prague took place.
On April 1st of 1939, 10th Panzer Division (also known as 4th Panzer Brigade) commanded by General-Major Rudolf Schaal began forming in Prague. 8th Panzer Regiment was attached to the 10th Panzer Division and later on 7th Panzer Regiment. In 1939, new commanders were also appointed, General-Major Friedrich Kirchner to 1st Panzer Division and General-Major Horst Stumpff to 3rd Panzer Division.
In August / September of 1939, improvised Panzer Division Kempf (also known as Panzerverband Ostpreussen / Kempf) was raised. It was commanded by Werner Kempf. This division was made up of 7th Panzer Regiment along with various other units including SS Regiment "Deutschland".
In August of 1939, each Panzer Regiment was composed of two Panzer Abteilungs. Each Abteilung was composed of two light companies (equipped with PzKpfw I and II) and one medium company (equipped with PzKpfw III and IV) along with other units. Each Abteilung had 71 to 74 tanks including 5 command tanks, each Regiment had 150 to 156 tanks including 12 command tanks. Single division had 308 to 316 tanks including 26 command tanks.
Each Panzer Division had its own infantry, reconnaissance, artillery, transport, communication, medical, technical and general services component. At the time, 1st, 2nd and 3rd Panzer Divisions were identical in size and organization, 4th Panzer Division lacked some infantry and anti-tank units and 5th Panzer Division had additional infantry and motorcycle units making it the largest Panzer Division, while 10th Panzer Division was not yet fully organized.
On August 17th of 1939, all panzer units were put on alert and prepared to move out. On August 25th, they began moving towards the eastern border of the Reich. On September 1st of 1939, World War II began.