The Panzer III was used in the campaigns against Poland, France, the Soviet Union and in North Africa. A handful were still in use in Normandy, Anzio, Finland and in Operation Market Garden in 1944.
In the Polish and French campaigns, the Panzer III formed a small part of the German armored forces. Only a few hundred Ausf. A through F were available in these campaigns, most armed with the 37-mm (1.46 in) gun. They were the best medium tank available to the Germans and outclassed most of their opponents such as the Polish 7TP, French R-35 and H-35 light tanks.
Around the time of Operation Barbarossa, the Panzer III was numerically the most important German tank. At this time the majority of the available tanks (including re-armed Ausf. E and F, plus new Ausf. G and H models) mounted the 50-mm (1.97 in) KwK 38 L/42 cannon which also equipped the majority of the tanks in North Africa. Initially, the Panzer IIIs were outclassed and outnumbered by Soviet T-34 and KV tanks. However, the most numerous Soviet tanks were the T-26 and BT tanks. This, along with superior German tactical skill, crew training, and the good ergonomics of the Panzer III all contributed to a rough 6:1 favourable kill ratio for German tanks of all types in 1941.
With the appearance of the T-34 and KV tanks, rearming the Panzer III with a longer, more powerful 50-mm (1.97 in) cannon was prioritised. The T-34 was generally invulnerable in frontal engagements with the Panzer III until the 50 mm KwK 39 L/60 gun was introduced on the Panzer III Ausf. J¹ in the spring of 1942 (the gun was based on infantry's 50 mm Pak 38 L/60). This could penetrate the T-34 frontally at ranges under 500 metres (1,600 ft). Against the KV tanks it was a threat if armed with special high velocity tungsten rounds. In addition, to counter antitank rifles, in 1943 the Ausf. L version began the use of spaced armor skirts (schürzen) around the turret and on the hull sides. However, due to the introduction of the upgunned and uparmored Panzer IV, the Panzer III was, after the Battle of Kursk, relegated to secondary roles, such as training, and it was replaced as the main German medium tank by the Panzer IV and the Panther.
The Panzer III chassis was the basis for the turretless Sturmgeschütz III assault gun, one of the most successful self-propelled guns of the war, and the single most-produced German armored fighting vehicle design of World War II.
By the end of the war, the Pz.III had almost no frontline use and many vehicles had been returned to the factories for conversion into StuG assault guns, which were in high demand due to the defensive warfare style adopted by the German Army by then.
The following report written by Hauptmann Oehme, the commander of the 8.Kompanie/Panzer-Regiment 3, relates his experience in attempting to knock out T34 and KW-I tanks:
Combat Report for the Period of 11 through 17 August 1942:
At about 1800 hours, I received the order to drive to Jelnja to support the Gruppe von Bisehoffshausen with the Panzers that had just been repaired and the four Pz.Kpfw.IV (7.5 cm Kw.K.40 L/43) that had just arrived.
The Panzer-Kompanie counterattacked JeInja, which was surrounded by our Panzers and taken under heavy fire by all of the Panzers. The front elements of the Russians pulled back and most of the houses in the village went up in flames. It was observed that two T-34s drove off in reverse out of burning sheds.
As dawn broke, the Russians renewed the attack with tank and infantry forces. The tanks were immediately spotted and two T-34s on the road were knocked out at a range of about 300 meters. The rest of the tanks must have quickly retreated, as determined by the noise from their engines.
During the evening hours of 13th August, the Russians again attacked with tanks and a few infantry riding on them. In spite of night falling, a further two T34s and a KW-I were knocked out of which two enemy tanks brightly burned, upon which the rest of the tanks turned back. The attack was repulsed.
During the night, the opponent with tanks took up positions in the depression by Shulebino and at dawn attempted to break through the woods by Point 208. At the same time eight to ten KW-I attacked on the road. Of these, two were knocked out in our position by the Pz.Kpfw.IV with a long gun at a range of 15 to 20 meters. The rest were convinced to turn back. It should be noted that it was necessary to use about eight Hohlraumgranaten (shaped charge shells) to set each of the KW-I on fire. At Point 208, three T34s managed to break into the position but didn't exploit the opportunity any further. The company commander of the infantry urgently requested Panzer support because these enemy tanks had hidden in the woods. One Pz.Kpfw.IV (7.5 cm Kw.K. L/24) and two Pz.Kpfw.III (5 cm Kw.K. L/42) were sent to the area where the enemy tanks had broken in.
In the afternoon, the Russians again attacked with strong tank forces. This time his attempt occurred south of the road. Several tanks landed in the swamp and remained stuck there. In the evening, these tanks were knocked out by the 5.Kompanie/Panzer-Regiment 3, while on the road four additional KW-I were knocked out by the 8.Kompanie. An 8.8 cm Flak gun had a large part in this last defensive battle. This gun was located in an alley south of the road, fell out when damaged by gun fire, and was pulled back.
On this day, several smaller Russian tanks were knocked out that had attacked separately. In addition a Pz.Kpfw.IV (7.5 cm Kw.K.40 L/43) was knocked out by a KW-I. One of the crew was killed, two severely wounded, and one lightly wounded.
Another Pz.Kpfw.IV (7.5 cm Kw.K.40 L/43) fought still another T34 but was itself knocked out. The Pz.Kpfw.IV immediately burned out. The commander and gunner were wounded, three of the crew were killed immediately. During these defensive actions from 11 to 17 August 1942, the 8.Kompanie knocked out 45 enemy tanks, of which 11 were T60s, and the rest T34s and KW-Is.