The Boeing 727 design was a compromise among United Airlines, American Airlines, and Eastern Air Lines; each of the three had developed requirements for a jet airliner to serve smaller cities with shorter runways and fewer passengers. United Airlines requested a four-engine aircraft for its flights to high-altitude airports, especially its hub at Stapleton International Airport in Denver, Colorado. American Airlines, which was operating the four-engined Boeing 707 and Boeing 720, requested a twin-engined aircraft for efficiency. Eastern Airlines wanted a third engine for its overwater flights to the Caribbean, since at that time twin-engine commercial flights were limited by regulations to routes with 60-minute maximum flying time to an airport (see ETOPS). Eventually, the three airlines agreed on a trijet design for the new aircraft.
In 1959, Lord Douglas, chairman of British European Airways (BEA), suggested that Boeing and de Havilland Aircraft Company (later Hawker Siddeley) work together on their trijet designs, the 727 and D.H.121 Trident, respectively. The two designs had a similar layout, the 727 being slightly larger. At that time Boeing intended to use three Allison AR963 turbofan engines, license-built versions of the Rolls-Royce RB163 Spey used by the Trident. Boeing and de Havilland each sent engineers to the other company's locations to evaluate each other's designs, but Boeing eventually decided against the joint venture. De Havilland had wanted Boeing to license-build the D.H.121, while Boeing felt that the aircraft needed to be designed for the American market, with six-abreast seating and the ability to use runways as short as 4,500 feet (1,400 m).
In 1960, Pratt & Whitney was looking for a customer for its new JT8D turbofan design study, based on its J52 (JT8A) turbojet, while United and Eastern were interested in a Pratt & Whitney alternative to the RB163 Spey. Once Pratt & Whitney agreed to go ahead with development of the JT8D, Eddie Rickenbacker, chairman of the board of Eastern, told Boeing that the airline preferred the JT8D for its 727s. Boeing had not offered the JT8D, as it was about 1,000 lb (450 kg) heavier than the RB163, though slightly more powerful; the RB163 was also further along in development than the JT8D. Boeing reluctantly agreed to offer the JT8D as an option on the 727, and it later became the sole powerplant.
With high-lift devices on its wing, the 727 could use shorter runways than most earlier jets (e.g. the 4800-ft runway at Key West).
Later 727 models were stretched to carry more passengers and replaced earlier jet airliners such as the Boeing 707 and Douglas DC-8, as well as aging propeller airliners such as the DC-4, DC-6, DC-7, and the Lockheed Constellations on short- and medium-haul routes.
For over a decade, more 727s were built per year than any other jet airliner; in 1984, production ended with 1,832 built and 1,831 delivered, the highest total for any jet airliner until the 737 surpassed it in the early 1990s.