The Arado SD III was a single-seat sesquiplane fighter produced alongside the similar SD II and that became the basis for the Arado Ar 64.
It was very similar to the SD II, but had a different configuration of engine and propeller. The SD II was powered by a Gnome-Rhône Jupiter VI with reduction gearing and a three-bladed wooden propeller. The SD III also used a Jupiter engine, although with only 490hp compared to the 530hp of the SD II. The Jupiter engine of the SD III was a direct-drive version (with no reduction gearing) and drove a two-blade propeller.
The SD III achieved a top speed of 140mph at 13,125ft, a slight decrease on the 146mph of the SD II, but not the 10% drop that might have been expected from the fall in engine power. A single prototype of the SD III was built and underwent trials in 1930, but failed to achieve the required performance, and work moved onto the similar Arado Ar 64.