Following the outbreak of World War II, the German Schnellboote began undergoing active modernization to better suit combat operations. Changes to their design were made as early as 1940, affecting both existing and new boats under construction. Starting with the S-67, ships in the S-38 series began receiving a new, low-profile, armored bridge. Their armament was strengthened and other issues with the earlier models were resolved. Although the Kriegsmarine's wartime modernization did not receive a separate designation, later historians referred to it as the S-38b. The last boats of this project were launched at the end of 1943. Most of the boats were lost during World War II, but some survived and were transferred to the fleets of the Allied powers.

The S-38b was introduced in Update 1.77 "Advancing Storm". This boat is notable for its high speed and maneuverability, as well as its decent artillery and torpedoes. However, it is not particularly durable, mainly due to its wooden hull.