The DH.60 was developed from the larger DH.51 biplane. The first flight of the Cirrus powered prototype DH.60 Moth (registration G-EBKT) was carried out by Geoffrey de Havilland at the works airfield at Stag Lane on 22 February 1925. The Moth was a two-seat biplane of wooden construction, it had a plywood covered fuselage and fabric covered surfaces, a standard tailplane with a single tailplane and fin. A useful feature of the design was its folding wings which allowed owners to hangar the aircraft in much smaller spaces. The then Secretary of State for Air Sir Samuel Hoare became interested in the aircraft and the Air Ministry subsidised five flying clubs and equipped them with Moths.

The prototype was modified with a horn-balanced rudder, as used on the production aircraft, and was entered into the 1925 King's Cup Race flown by Alan Cobham. Deliveries commenced to flying schools in England. One of the early aircraft was fitted with an all-metal twin-float landing gear to become the first Moth seaplane. The original production Moths were later known as Cirrus I Moths.

Three aircraft were modified for the 1927 King's Cup Race with internal modifications and a Cirrus II engine on a lowered engine mounting. The original designation of DH.60X (for experimental) was soon changed to Cirrus II Moth; the DH.60X designation was re-used in 1928 for the Cirrus III powered version with a split axle. The production run for the DH.60X Moth was short as it was replaced by later variants, but it was still available to special order.

Although the Cirrus engine was reliable, its manufacture was not. It depended on components salvaged from World War I–era 8-cylinder Renault engines and therefore its numbers were limited by the stockpiles of surplus Renaults. Therefore, de Havilland decided to replace the Cirrus with a new engine built by his own factory. In 1928 when the new de Havilland Gipsy I engine was available a company DH.60 Moth G-EBQH was re-engined as the prototype of the DH.60G Gipsy Moth.

Next to the increase in power, the main advantage of this update was that the Gipsy was a completely new engine available in as great a number as the manufacture of Moths necessitated. The new Gipsy engines could simply be built in-house on a production-line side by side with the production-line for Moth airframes. This also enabled de Havilland to control the complete process of building a Moth airframe, engine and all, streamline productivity and in the end lower manufacturing costs. While the original DH.60 was offered for a relatively modest £650, by 1930 the price of a new Gipsy-powered Moth was still £650, this in spite of its state-of-the-art engine.

DH.60G-III Moth Major G-ADHE at Coventry in June 1954

A metal-fuselage version of the Gipsy Moth was designated the DH.60M Moth and was originally developed for overseas customers, particularly Canada. The DH.60M was also licence-built in Australia, Canada, the United States and Norway. Also in 1931 a variant of the DH.60M was marketed for military training as the DH.60T Moth Trainer.