1921–1938

At the end of World War I, the Treaty of Versailles demanded that BMW cease production of aircraft engines. To remain in business, the company began producing small industrial engines (along with farm equipment, household items and railway brakes). In 1920, BMW M2B15 flat-twin petrol engine was released. Despite being designed as a portable industrial engine, the M2B15 was also used by several motorcycle manufacturers, including for the 1920–1923 Victoria KR1 and the 1920–1922 Bayerische Flugzeugwerke (BFw) Helios motorcycles.

BMW merged with Bayerische Flugzeugwerke in 1922, and the BFw Helios became the starting point for the first BMW motorcycle. Released in 1923, the BMW R 32 used a 486 cc (29.7 cu in) flat-twin petrol engine, which was transversely mounted (to eliminate the cooling problems of the longitudinally-mounted engine in the Helios). This engine with 6.3 kW (8.5 hp), resulting in a top speed of 95 to 100 km/h (59 to 62 mph). At a time when many motorcycle manufacturers used total-loss oiling systems, the new BMW engine featured a recirculating wet sump oiling system with a drip feed to roller bearings; a design which BMW used until 1969. The R 32 also started the tradition of shaft drive, which was used on all BMW motorcycles until 1994.

The BMW R 37, produced from 1925 to 1926, was BMW's first sporting model. It was based on the R 32 and used an overhead valve engine producing 12 kW (16 hp).

The first single-cylinder BMW motorcycle was the 1925 BMW R 39, which was BMW's smallest model and used a 250 cc (15.3 cu in) engine. It was not successful and was discontinued in 1927. The next single-cylinder motorcycle was the BMW R 2, which was released in 1931. It used a 200 cc (12.2 cu in) engine and could therefore be ridden in Germany without a motorcycle licence at that time. The lineage of single-cylinder motorcycles continued with the 400 cc (24.4 cu in) BMW R 4 in 1932 and the 300 cc (18.3 cu in) BMW R 3 in 1936.

The BMW R 12 and BMW R 17, both introduced in 1935, were the first production motorcycles with hydraulically damped telescopic forks.

In 1937, Ernst Henne recorded a top speed of 279.5 km/h (173.7 mph) on a BMW 500 Kompressor racing motorcycle, setting a world record that stood for 14 years.

The BMW R 71 746 cc (45.5 cu in)big flat-twin motorcycle was exceptional. It was the Icon of BMW, expensive to build and well engineered. Unfortunately only 2638 motorcycles could be built before production was disrupted due to the War. Original bikes are now rare and highly sought after. Around 500 are known to survive today. It was licensed to the Soviet Union in 1938, resulting in the Dnepr M-72 which was produced from 1942 to 1960.