The SG-540 is an assault rifle of Swiss origin. The design has many elements of the SG-530 prototype, which was not taken into production due to its costly roller locking mechanism. The SG-540 was developed as a much cheaper alternative. The later and higher quality SG-550 was based on the SG-540 design.

The SG-540 has a conventional layout. To keep costs down it has a two piece stamped metal receiver and it uses a long stroke gas piston and rotating bolt. The forearm is made of plastic and a plastic fixed butt or folding metal butt is fitted. The three position gas piston allows use in harsh conditions and the firing of rifle grenades. A bipod that folds along the forearm is standard.

The SG-540 fires the 5.56x45mm M193 round from 20 or 30 round magazines. It is a select fire weapon with single shot, burst fire and fully automatic capability. It has a cyclic rate of fire of 650 to 800 rounds per minute, varying due to fouling and gas regulator setting. The SG-542 variant fires the more powerful 7.62x51mm round from 20 round magazines. By closing the gas regulator rifle grenades can be fired.

The SG-540 has been sold to many nations, but mostly in limited quantities. Most customers are African and South American nations. The majority of SG-540 were produced in France due to strict Swiss export regulations. It was never adopted by Swiss forces.