Simultaneously with the creation of the SM.85, SIAI engineers were designing a version of the aircraft with liquid-cooled engines. The continuity of the design was preserved, but a deep modernization was carried out. Modifications were made to: wing, flaps, tail unit, fuselage, cockpit. As a power plant, the customer, represented by the Italian Air Force, required the installation of 12-cylinder V-shaped engines Walter "Sagitta" I.C.S.R. (600 hp), which had good weight characteristics with sufficient thrust-to-weight ratio.
A prototype of the SM.86W dive bomber (registration number MM.397) entered trials in 1940. The tests lasted several months and ended in August 1940 at the research center in Guidonia, where the dive bomber was taken to be evaluated for suitability as a combat vehicle.
The second prototype built soon (ММ.398) received a similar designation SM.86W, but differed in Isotta Frascini "Gamma" engines with a power of 515 hp. From August 7, 1941, flights on it generally confirmed the data previously obtained during the tests of the first prototype.