The development of the M16A2 rifle was originally requested by the United States Marine Corps as a result of the USMC's combat experiences in Vietnam with the XM16E1 and M16A1. The Marines were the first branch of the U.S. Armed Forces to adopt the M16A2 in the early/mid 1980s with the United States Army following suit in adopting the M16A2 in the late 1980s. Modifications to the M16A2 were more extensive. In addition to the new rifling, the barrel was made with a greater thickness in front of the front sight post to resist bending in the field and to allow a longer period of sustained fire without overheating. The rest of the barrel was maintained at the original thickness to enable the M203 grenade launcher to be attached. The front sight was now a square post with 4 detent positions, adjustable for vertical zeroing by using a cartridge, nail or special tool. A new adjustable rear sight was added, allowing the rear sight to be dialed in for specific range settings between 300 and 800 meters to take full advantage of the ballistic characteristics of the new SS109 rounds and to allow windage adjustments without the need of a tool or cartridge. The flash suppressor was again modified, this time to be closed on the bottom so it would not kick up dirt or snow when being fired from the prone position, and acting as a recoil compensator. The front grip was modified from the original triangular shape to a round one, which better fitted smaller hands and could be fitted to older models of the M16. The new handguards were also symmetrical so that armories needn't separate left and right spares. The handguard retention ring was angled to make it easier to install and uninstall the handguards. The pistol grip adds a notch for the middle finger and more texture to enhance the grip. The buttstock was lengthened by 5/8 inch (16 mm). The new buttstock became ten times stronger than the original due to advances in polymer technology since the early 1960s. Original M16 stocks were made from fiberglass-impregnated resin; the newer stocks were engineered from DuPont Zytel glass-filled thermoset polymers. The new stock included a fully textured polymer buttplate for better grip on the shoulder, and retained a panel for accessing a small compartment inside the stock, often used for storing a basic cleaning kit. The heavier bullet reduces muzzle velocity from 3,200 feet (980 m) per second (975 m/s), to about 3,050 feet (930 m) per second (930 m/s). The A2 also uses a faster twist rifling to allow the use of a trajectory-matched tracer round. A spent case deflector was incorporated into the upper receiver immediately behind the ejection port to prevent casings from striking left-handed users.
The action was also modified, replacing the fully-automatic setting with a three-round burst setting. When using a fully-automatic weapon, poorly trained troops often hold down the trigger and "spray" when under fire. The U.S. Army concluded that three-shot groups provide an optimum combination of ammunition conservation, accuracy and firepower. There are mechanical flaws in the M16A2 burst mechanism. The trigger group does not reset when the trigger is released. If the user releases the trigger between the second and third round of the burst, for example, the next trigger pull would only result in a single shot. Even in semi-automatic mode, the trigger group mechanism affects weapon handling. With each round fired, the trigger group cycles through one of the three stages of the burst mechanism. Worse, the trigger pull at each of these stages may vary as much as 6 lbf (27 N) in pressure differential, detracting from accuracy.
All together, the M16A2s new features added weight and complexity to the M16 series. Critics also point out that neither of the rear sight apertures is ideally sized. The smaller aperture was described as being too small, making quick acquisition of the front sight post difficult; and the larger aperture was described as being too large, resulting in decreased accuracy. To make matters worse, the rear sight apertures are not machined to be on the same plane. In other words, the point of impact changes when the user changes from one aperture to the other. The rear sight's range adjustment feature is rarely used in combat as soldiers tend to leave the rear sight on its lowest range setting: 300 meters. Despite criticism, a new rifle was needed both to comply with NATO standardization of the SS109 (M855) and to replace aging Vietnam era weapons in the inventory.