The W194 was the work of Rudolf Uhlenhaut, Daimler-Benz's chief developing engineer. Its spaceframe chassis weighed only 140 to 150 pounds and was fabricated from SAE 4130 chromoly steel tubing. The frame's cage structure surrounded the passenger compartment so completely that conventional side-opening doors were impractical; the solution was the distinctive gull-wing arrangement, with hinged door panels that opened upward from the roof. Early versions had only opening windows in place of full doors, but Le Mans organizers required larger access openings, leading to new chassis with proper cut-in gull-wing doors for that event.
The engine, designated M194, was derived from the three-litre straight-six M186 used in the W186 luxury sedan. For racing application it received a high-output triple two-barrel Solex carburetor setup from the exclusive 300 S coupe, a larger-valve aluminium cylinder head, and was canted fifty degrees to the left to lower the bonnet line. In this form it produced 175 horsepower, a significant improvement over the 150 horsepower touring specification but still less than the best Ferrari and Jaguar competition engines of the period. Top speed was approximately 160 mph. Aerodynamics, suspension, and weight management made up the deficit: four-wheel independent suspension provided handling that was relatively precise for the era, though the rear swing axle — jointed only at the differential, not at the wheels — could become unpredictable at very high speeds or on uneven surfaces.
The W194 competed only in 1952, the year before the formal World Sportscar Championship was established. Its campaign covered the major long-distance events that would become the WSC's core calendar from 1953.
At the Mille Miglia in May 1952, the W194 managed second and fourth place overall, beaten by a new Ferrari 250 S. Two weeks later, at the Bern Grand Prix run on the Bremgarten circuit in support of the Swiss Grand Prix, Mercedes entered four cars in different colours: Rudolf Caracciola in dark red, Karl Kling in green, Hermann Lang in powder blue, and Fritz Riess in silver. After 18 laps the result was a decisive 1-2-3 Mercedes victory, with the entire remaining field a lap down. Caracciola crashed out on lap 14 in a battle with Lang, suffering a broken leg that ended his career.
For Le Mans, new chassis with larger door openings had to be constructed to satisfy the organizers. An air brake above the roof was tested but not permitted for the race. Mercedes scored a 1-2 victory at the 24 Hours of Le Mans, with Kling and Riess taking the win. At the Nürburgring's Eifelrennen sports car race in support of the German Grand Prix, Mercedes entered open-topped spyder versions of the W194. One car was fitted experimentally with a supercharged M197 engine to qualify in the highest displacement class, though additional power proved unnecessary. The result was a 1-2-3-4 clean sweep.
In November 1952, Mercedes entered three cars in the Carrera Panamericana, a long-distance road race through Mexico. Two finished; the third was disqualified. The result gave Mercedes a definitive 1-2 at one of the era's most prestigious and demanding events. Over the course of 1952, the W194's combination of wins at Le Mans and the Carrera Panamericana, plus a second place at the Mille Miglia and a no-show at Sebring, would retrospectively have been sufficient to win the hypothetical 1952 version of the World Sportscar Championship with 22 points out of a maximum 32, ahead of Ferrari.
The W194 is regarded as an important car in Mercedes-Benz history not only for its on-track results but for its commercial and strategic consequences. The success of the 300 SL name at Le Mans and the Carrera Panamericana persuaded Daimler-Benz's American importer Max Hoffman that a road-legal version would sell well in the United States. This recommendation led directly to the 1954 Mercedes-Benz 300 SL Gullwing — designation W198 — which used fuel injection (via the M198 engine, a development of the M194) and retained the gull-wing doors necessitated by the racing car's spaceframe. More than 80 percent of the approximately 1,400 W198 units produced were sold in the United States, making it the first Mercedes-Benz widely successful in the American market and transforming the company's image there from staid luxury manufacturer to producer of high-performance sports cars.
The W194 was succeeded as a racing machine by the W196 S Mercedes-Benz 300 SLR in 1955. One W194 chassis — number 00002, which never raced and served as a parts and training car — survives in fully restored form in the Mercedes-Benz collection. As of 2012 the car had received multiple private purchase offers of approximately $15 million but was not for sale.