[douglasschuckert]

The MP5 was first designed by Heckler & Koch, Germany in 1966 as the HK54. The '5' meaning submachine gun and the '4' identifies it as being chambered in the 9x19 Parabellum (the 9mm round then was exceptionally hot, in today’s standards (US) it would be considered a 9mm +P or +P+). West Germany's Government changed the name to Maschinenpistole 5 or Machine Pistol 5. MP5 for short. West Germany used it in LE and Border Guard rolls.
It was first introduced to CAPT Richard Marcinko in 1980 when CAPT(SEAL/PJ) Marcinko formed SEAL Team 6, by Germany's GSG9 (Grenzschutzgruppe 9 or Border Guards 9) - Germany's elite Counter Terrorism Force (today they are regarded as being some of the absolute best in the world, bar none). This is where the MP5 became a world player.
The design proved so successful that soon the rest of the military began using it. Pilots, both fixed wing and rotary, carried it in their cockpits as a GREAT compact SMG (where the M16 doesn't fit - where it remains in service to this day). It was very soon adopted for LE use in about 1983 (around there), and it became EXTREMELY popular among NFA shooters. Several C2 Manufacturers began taking the SP89/54 (the simi auto version) and converting them to the MP5 and registering them on the market as either 'registered sears' or 'registered receivers'. (Terry Dyer and John Flemming are some of the most common)
A little known fact, is that there are no (to my knowledge) genuine factory, MP5's on the transferable registry. H&K would only sell to the military at first, then after 1985 they began selling them to LE. All the MP5's that are out there today were at one time an SP89 or a variant. H&K did produce SP89's specifically for conversions, so there are some that were factory stamped MP5, but were shipped simi-auto where a C2 SOT converted it to FA. H&K produced the MP5 in 26 variants with 94 & SP98 being the simi-auto versions:

Unless noted otherwise, all MP5 variants are chambered for the 9 × 19 mm Parabellum cartridge. Generally, "A2" and "A4" denote fixed stock, "A3" and "A5" denote retractable stock, and "A1" denotes no stock, with a buttcap (or receiver cap) in place.

MP5A1 — MP5 with buttcap/receiver cap; Navy/"SEF" trigger group.
MP5A2 — Fixed stock, Navy/"SEF" trigger group.
MP5A3 — Retractable stock, Navy/"SEF" trigger group.
MP5A4 — Fixed buttstock, 3-round burst trigger group.
MP5A5 — Retractable buttstock, 3-round burst trigger group; noted rifle-like accuracy at 100 meters.
MP5SFA2 — SF denotes single fire, with full auto removed; fixed stock.
MP5SFA3 — MP5SF with retractable stock.
MP5-N — Model developed specifically for the U.S. Navy. Navy trigger group, 3-lug/threaded barrel for attaching a suppressor, and retractable stock.
MP5-F — Model developed specifically for the French military. Rubber-padded retractable stock, ambidextrous sling loops/bolts and internal modifications to handle high-pressure ammunition.
MP5-J — Model developed for Japan. Thicker butt pad and alternate muzzle flash guard.
MP5K — The very short version of the MP5; "SEF" trigger group.
MP5KA1 — MP5K with smooth upper surface and small iron sights; "SEF" trigger group.
MP5KA4 — MP5K with 3-round burst trigger group.
MP5KA5 — MP5KA1 with 3-round burst trigger group.
MP5K-N — MP5K with Navy trigger group and 3-lug/threaded barrel for mounting of suppressors or other muzzle attachments.
MP5K-PDW — Personal Defense Weapon; MP5K-N with added folding stock and 3-lug/threaded barrel for mounting of suppressors; Navy or 3-round burst trigger group. It was first introduced in 1991.

Older model MP5A3 with retractable stockMP5SD1 — Integrated suppressor (Schalldämpfer), A1-type buttcap with sling loop; Navy/"SEF" trigger group.
MP5SD2 — Integrated suppressor (Schalldämpfer), fixed stock; Navy/"SEF" trigger group.
MP5SD3 — Integrated suppressor (Schalldämpfer), retractable stock; Navy/"SEF" trigger group.
MP5SD4 — MP5SD1 with 3-round burst trigger group.
MP5SD5 — MP5SD2 with 3-round burst trigger group.
MP5SD6 — MP5SD3 with 3-round burst trigger group.
MP5SD-N — MP5SD with Navy trigger group and KAC stainless steel suppressor; retractable stock.
MP5/10 — Chambered in 10 mm Auto, available in various stock/trigger group configurations. It was made from 1992 to 2000.
MP5/40 — Chambered in .40 S&W, available in various stock/trigger group configurations. It was made from 1992 to 2000.
HK94 — American import model of the MP5 with 16-inch barrel and special safe/semi-automatic trigger group, designed for civilian use. It was made from 1983 to 1989, in three different configurations.
SP89 — Sport Pistole M1989. Semi-automatic–only version of the MP5K designed for civilian use. It had a modified foregrip redesigned into a traditional handguard that did not allow the fitting of the MP5K's foregrip to make it compliant with the Semi-Auto Weapons Ban of 1989. It was made from 1989 to 1994.
HK 54 — This was the original model that was produced in the mid sixties. It later became known as the MP5A1, a very slightly modified version.

The MP5 first sold for $900.00 and today cost about $2,000.00 (post sample). The units that are on the ‘Transferable Registry’ are ranging in price from between $10,000USD to over $25,000.00USD (depending on condition, rarity, if it’s a SEAR gun or registered receiver, if it’s a 3-pin swing down or a clipped and pinned lower, its serial number and age).

H&K has replaced the MP5 with the MP7 and the UMP. The UMP is similar, but uses a direct blowback action where the MP5 uses a rolling, locking, delayed blowback action. The UMP is also a very light weapon (compared to the MP5’s 6lbs empty) and has a much higher rate of climb and a lot crisper recoil (i.e. intense). Both SMG’s have similar cyclic rates of between 800 and 900rpm.

The MP5-SD is the suppressed standard that ALL other silencers are measured to. It was at its time (and if you’ve ever heard RTDS, still is) the quietest smg on the market (even more so than the Sterling…. Sorry guys, but the Sterling’s action is a LOT louder than the MP5’s I shot both side by side…).

The MP5 is still in use by many LEO departments and military units. Although it is being fased out from active duty and replaced with higher caliber SMG's (the 10.4" M4 & the UMP 45) - due to the ineffectiveness of the 9mm round, but many pilots still carry the MP5 as primary weapon when they have to eject or crash behind enemy lines, and quite a few police officers carry the MP5 (reconverted to simi-auto...usually) in their cruisers, while Bomb Squads/SWAT/and ERT Units use it on their missions/call outs. The MP5 is still actively used by SEAL and Special Forces Teams.

All in all the MP5 was, is, and always will be, the absolute best 9mm SMG ever produced. It's the M1911-A1 of the SMG world. You simply cannot improve perfection. Everything else is like re-inventing the wheel. (IMHO).