Although the C.200 had proven itself as an excellent all-around airframe, it was clear by 1940 that it's puny armament and 315mph speed was no longer enough to allow it to fight in the front lines. Increasing either would require more power, and that proved to be a real problem. The Saetta's Fiat A.74 radial had already reached its development potential at a measly 870hp, and it was unlikely it would ever deliver much more. Attention turned to inlines due to their better streamlining, but the only Italian inline at the time was the even smaller 840hp Isotta-Fraschini Delta IV.
Macchi's chief designer, Mario Castoldi, realized there was no choice but to turn to foreign sources for engines. The only reasonable engine would be the 1,175hp Daimler-Benz DB 601 from Germany, so importing one at company expense a prototype combining the C.200's airframe with the DB 601Aa engine was completed in August 1940. The added power could have been too much for the small plane's controls, so Castoldi extended the left wing by 8 inches in order to provide more lift on that side and counteract the torque.
The results were astonishing. The new C.202 reached 370mph, even though they had also upgunned the plane with the addition of another pair of 7.7mm guns in the wings. The new version was immediately put into production as the Folgore (Thunderbolt) using imported engines while Alfa Romeo set up production of the engine under license as the R.A.1000 Monsonie. Engine production was so slow that Macchi was forced to continue building some with the older engines as C.200's (although they included the new wings and guns), but supplies slowly improved and by late 1942 Folgores outnumbered all other fighters in service.
Deliveries started reaching a newly-formed conversion unit, 1st Stormo C.T., in the summer of 1941, and by November they had been moved to the front in Libya. In service the plane proved to be superior to the Curtiss P-40 and Hawker Hurricane, and was considered to be an even match for the Supermarine Spitfire. The plane was loved by the pilots, not only for its performance, but due to its superbly harmonized controls and generally excellent manuverability and control.
Only two modified versions were built, the C.202AS which included dust filters and other equipment for operations in the desert (AS stands for Africa Settentroniale, North Africa), and the C.202CB (Caccia Bombardiere, or Fighter-Bomber) with underwing hardpoints for two 50, 100 or 160kg bombs, or two 100 litre drop tanks. Macci produced only 400 of the 1,200 Folgore's eventually built, the rest being supplied by the otherwise underused lines at Breda and Ambrosini.
Looking to improve performance even more, as well as retain commonality with current German engines, the C.202 was later modified with a Dailmer-Benz DB 605 engine to produce the C.205.