The M1 was developed by Lamborghini in Italy to BMW specifications and built by the coachbuilder Baur in Stuttgart, Germany. The M in the name stands for Motorsport.

The BMW M1 was originally intended for use in motorsport, with only a limited homologation series being built for public road use. However, changes in international regulations prior to presentation of the M1 made its use as a racing car practically superfluous. It still participated as a racing car with moderate success in a variety of series, but the majority of vehicles produced were, in contrast to the original plans, sold to private individuals.

In motorsport, the M1 attracted a great deal of attention and respect in the Procar series. In 1979 and 1980, the five fastest Formula One drivers to qualify in the practice runs each competed against selected private drivers.

A total of only 460 M1 vehicles was produced between 1978 and 1981.