In the third prototype of 1935, a pilot's seat was raised and the engine was lowered to obtain better view. This prototype was accepted for a production, with a name Karas' (in Polish - the crucian carp). The first series, PZL.23A was fitted with a Bristol Pegasus IIM2 radial engine of 670 hp (500 kW) produced in Poland under licence. Since this engine proved to be unreliable, the final variant PZL.23B was fitted with a newer Pegasus VIII of 720 hp (537 kW).

In 1936, 40 PZL.23A were produced. Between late 1936 and February 1938, 210 PZL.23B were produced with the newer engines. They were also known as Karas' A and B or Karas' I and II. All PZL.23s had military numbers from 44.1 to 44.250.

The Bristol engines were licensed for use in Poland only, so for export purposes the Gnome-Rhône 14K was used in a variety of PZL designs. In this case the 14K-powered PZL.23, with some changes to the airframe, became the PZL.43 Karas'. Final export variant was PZL.23A, with 1020 hp Gnome-Rhone 14N-01 engine. 52 PZL.43s were made in total, all for Bulgaria only. The new engine improved the plane's performance considerably, maximum speed increased to 365 km/h.

At that time, Poland developed a new light bomber, partly basing on PZL.23 design, the PZL.46 Sum, but only two prototypes were completed before the war, in 1938. There was also a single experimental variant of the Karas', PZL.42, with double tail fins and a modified bombardier gondola, retractable into the fuselage.

Sometimes the aircraft is called the "PZL P.23", but despite an abbreviation P.23 painted on a tail fin, the letter "P" was generally reserved for fighters of Pulawski's design (like PZL P.11).

In 1939, the aircraft was not a modern one. Its main deficiency was its low speed but a lack of manoeuvrability was also a problem (it was noted, that a maximum speed of PZL.23B was 365 km/h, but it was forbiden to exceed 319 km/h due to dangerous flight characteristics). At the outbreak of the World War II, on 1 September 1939, Poland had 114 PZL.23B in combat units (a further 75 PZL.23B and 35 PZL.23A were in reserve, air schools or under repairs). PZL.23B were used in five bomber squadrons (Eskadra Bombowa) of the Bomber Brigade and seven Army reconnaissance squadrons, each with ten aircraft (other squadrons of the Bomber Brigade were equipped with PZL.37 ?os'). They actively took part in repelling of the invasion of Poland. Some aircraft were also used in wartime improvised units.

On 2 September 1939, one PZL.23B of the 21st Squadron bombed a factory in Ohlau as the first bomb attack on the German territory. The bomber squadrons attacked German armoured columns, especially on 3 September 1939, while the main mission of Army squadrons was reconnaissance. All PZL.23s suffered high losses due to low speed, lack of armour and fighter protection. Many were shot down by the German fighter planes, but they also shot down a few in return. Despite lack of armour, crews often attacked German columns from low level, making aircraft vulnerable for AA fire. Some 20 aircraft crashed on rough field airfields. The five squadrons of the Bomber Brigade delivered about 52-60 tons of bombs during the campaign, the Army squadrons added about a dozen tons of bombs as well. About 120 PZL.23s (86%) were destroyed in 1939, but only 67 due to direct enemey's actions. Only a small number were destroyed on airfields - the only successful Luftwaffe attack on Polish combat unit on an airfie ld during the campaign was on 14 September, at Hutniki, against PZL.23B of Bomber Brigade. In addition two PZL.43A from the Bulgarian order were impressed into the Polish service in the 41st Squadron.