This unit was originally formed on October 15th, 1935. In 1938, it moved to Austria after the annexation of that Country, taking on a large number of Austrians into its ranks. The Division then was used in the Polish Campaign in 1939, suffering heavy losses against the Poles. After Poland, the Division saw action in the West as a part of 12.Armee/Gen.Kdo. XIX.Armeekorps, starting in the Eifel area. In May, the 2.Panzer-Division took Abbeville along the English Coast which helped seal the ring around the Allied forces in the Dunkirk Pocket.
After the Campaign in the West, the 2.Panzer-Division spent time on occupation duty in Poland. During the months in Poland, the 2nd was reorganized and it provided units to other forming divisions, as well as taking on new units itself. It was then moved to Rumania in April, 1941 for action in the Campaign in the Balkans. In the Balkans, the 2nd helped take Athens in Greece, along with the 6.Gebirgs-Division.
After the Campaign in the Balkans ended the wheeled units of the 2.Panzer-Division moved to Yugoslavia via Albania and were entrained in Croatia for Germany. The tracked elements of the division were loaded for sea transport in the Greek port of Patras to Tarent in the south of Italy. On May 21st, 1941 the German transport ships Marburg and Kybfels carrying the tracked elements of the division were sunk by a recently laid British mine barrage. A considerable number of armored vehicles were thus lost causing any deployement of the division to be seriously delayed. The 2.Panzer-Division was in Germany when the Invasion of the Soviet Union began and in July of 1941 was transfered to Poland. In August, 1941 it was transfered to the south of France, and in September it was finally entrained for Russia, arriving at the front in October 1941.