Some of Lockheed's wooden designs, such as the Orion, had been built by Detroit Aircraft Corporation with metal fuselages. However, the Electra was Lockheed's first all-metal and twin-engine design by Hall Hibbard. The name Electra came from a star in the Pleiades. The prototype made its first flight on February 23, 1934 with Marshall Headle at the controls.

Wind tunnel work on the Electra was undertaken at the University of Michigan. Much of the work was performed by a student assistant, Clarence Johnson. He suggested two changes be made to the design: changing the single tail to double tails (later a Lockheed trademark), and deleting oversized wing fillets. Both of these suggestions were incorporated into production aircraft. Upon receiving his master's degree, Johnson joined Lockheed as a regular employee, ultimately leading the Skunk Works in developing advanced aircraft such as the Lockheed SR-71 Blackbird.

The Lockheed Electra was one of the first commercial passenger aircraft to come equipped with mud guards as standard equipment. Before the Electra, only aircraft with fixed landing gear had mud guards.

After October 1934 when the US government banned single-engined aircraft for use in carrying passengers or in night flying, Lockheed was perfectly placed in the market with its new Model 10 Electra. In addition to deliveries to US based airlines, several European operators added Electras to their prewar fleets. In Latin America, the first airline to use Electras was Cubana de Aviación, starting in 1935, for its domestic routes.

Besides airline orders, a number of non-commercial civil operators also purchased the new Model 10.  In May 1937, H.T. "Dick" Merrill and J.S. Lambie accomplished a round-trip crossing of the Atlantic Ocean. The feat was declared the first round-trip commercial crossing of that ocean by any aircraft. It won them the Harmon Trophy. On the eastbound trip, they carried newsreels of the crash of the Hindenburg, and on the return trip from the United Kingdom, they brought photographs of the coronation of King George VI. Bata Shoes operated the Model 10 to ferry their executives between their European factories.

Probably the most famous use of the Electra was the highly modified Model 10E flown by aviatrix Amelia Earhart. In July 1937, she disappeared in her Electra during an attempted round-the-world flight.

Many Electras and their design descendants (the Model 12 Electra Junior and Model 14 Super Electra) were pressed into military service during World War II, for instance the USAAF's C-36. By the end of the war, the Electra design was obsolete, although many smaller airlines and charter services continued to operate Electras into the 1970s.