The MR2 went through a redesign in 1989 (though North America did not receive them until early 1990 as 1991 models). The new car was larger, weighed 350 to 400 lb (159 to 181 kg) more than its predecessor due to having a more luxurious and spacious cabin, larger engine sizes, sturdier transaxle, and a more durable suspension setup. The overall design of the automobile received more rounded, streamlined styling, with some calling the MR2 SW20 a "baby Ferrari" or "poor man's Ferrari" due to design cues similar to the Ferrari 308 GTB/GTS or Ferrari 348.

Like the AW11 before it, Toyota spent countless hours fine-tuning the handling capabilities of the SW20, seeking advice from professional race car drivers, including Dan Gurney of Formula One, NASCAR, and Le Mans fame.[25]

When the AW11 was still in production and before the SW20 was officially shown to the public, several rumors were spreading stating that Toyota was building yet another mid-engine sports car, one that would have a 3.0-liter V6 engine that could directly compete with the 348, though this specific rumor was later shot down under the pretense that such a car would belong under the Lexus branding