The P226 was designed for entry into the XM9 Service Pistol Trials (see also Joint Service Small Arms Program) that were held by the US Army in 1984 on behalf of the US armed forces to find a replacement for the M1911A1. Only the Beretta 92F and the SIG P226 satisfactorily completed the trials.
According to a GAO report, Beretta was awarded the M9 contract for the 92F due to a lower total package price. The P226 cost less per pistol than the 92F, but SIG's package price with magazines and spare parts was higher than Beretta's. The Navy SEALs, however, later chose to adopt the P226.
Schweizerische Industrie Gesellschaft is a Swiss company. In the late 1960s, SIG entered into an agreement with German gun manufacturer (and eventual owner) J.P. Sauer & Sohn to increase the commercial marketing of their products. For the U.S. military XM9 trials, the P226 was imported by Saco Defense.
Interarms took over importing when the pistol was introduced for civilian sales. SIG Sauer eventually founded SIGARMS, Inc. in the United States to handle importation of their products. In 2000, SIG Holding AG sold J.P. Sauer & Sohn GmbH to two German businessmen. The brand name SIG Sauer remained at J.P. Sauer & Sohn GmbH.
Originally, the P226 slide was comprised of three different pieces of steel that were bent into shape using a mandrel. Beginning in 1996, production was shifted to CNC machining, and the slide was made from a single piece of stainless steel. This resulted in a stronger slide, which was necessary to chamber the more powerful .40 S&W and .357 SIG cartridges.
The P226 itself has spawned further sub-variants; the P228 and P229 are both compact versions of the staggered-column P226 design.