The 1968 model 177 was introduced in late 1967 with a 150 hp (112 kW) engine.  One of the design goals of this 172 replacement was to allow the pilot an unobstructed view when making a turn. In the 172 the pilot sits under the wing and when the wing is lowered to begin a turn that wing blocks the pilot's view of where the turn will lead to. The engineers resolved this problem by placing the pilot forward of the wing's leading edge, but that led to a too-far-forward center of gravity.

This problem was partially counteracted by the decision to use the significantly lighter Lycoming O-320 four-cylinder engine in place of the six-cylinder O-300 Continental used on the 172. The forward CG situation still existed even with the lighter engine, so a stabilator was chosen, to provide sufficient elevator control authority at low airspeeds.

The 177 design was intended to be a replacement for the 172, which was to be discontinued after introduction of the new aircraft. The new design was originally to be called the 172J (to follow the 1968 model 172I). However, as the time came to make the transition, there was considerable resistance to the replacement of the 172 from the company's Marketing Division. The 1969 172 jumped to the designator 172K—there is no 172J.

Soon after delivery of the first Cardinals to customers there were reported incidents of pilot-induced oscillation that alarmed Cessna enough that the factory initiated a priority program to eliminate the problem. The solution, which was provided to all aircraft already delivered at no cost, was known as Operation "Cardinal Rule" and included a series of 23 inspection, installation, and modification instructions. This Service Letter, SE68-14, consisted of modifying the stabilator to install slots just behind the leading edge (to delay the onset of stabilator stall) and installing full counterbalance (11 pounds versus the original 7 pounds) on the stabilator to eliminate the PIO problem.