[2] In 2008, BMW started competing with the Mercedes-Benz GLK-Class (renamed GLC-Class since 2016), and numerous other SUVs in this segment.

As a precursor to the X3, in 2003 BMW presented the xActivity concept vehicle at the Detroit Auto Show featuring the 3 Series platform and a fixed-profile convertible body style with reinforced longitudinal rails connect the A-pillars to the rear of the car on both sides, eliminating B- or C-pillars.

The X3 premiered in September 2003 at the Frankfurt Auto Show (Internationale Automobil-Ausstellung), sharing its rear suspension with the E46 330xi and using an automatic four-wheel drive system marketed as xDrive.

Styling exhibited interacting concave and convex surfacing, characteristic for the company at the time along with a reinterpreted Hofmeister kink.

The X3 was initially criticised for its harsh ride, austere interior, lack of off-road capability and high price.

[10] U.S-spec X3 models were well-equipped, with standard equipment such as: the BMW Business A/M-F/M-CD radio (with optional dealer-activated Bluetooth functionality for wireless phones), an eight-speaker premium audio system, leatherette-trimmed seating surfaces, dual power front bucket seats, aluminium interior trim accents, keyless entry, and seventeen-inch (17") aluminium-alloy wheels.

Optional equipment included a ten-speaker premium audio system with Digital Sound Processing (DSP), Sirius Satellite Radio, a dashboard-mounted colour GPS navigational system that replaced the upper dashboard storage compartment and contained a modified version of BMW's "iDrive" multimedia system, eighteen-inch (and later nineteen-inch) aluminium-alloy wheels, Nevada leather-trimmed seating surfaces, heated front and rear seats, a heated steering wheel, a security system, BMW Assist, a panoramic dual-pane moonroof, Xenon front headlamps with adaptive front headlamps, and sport front bucket seats.

U.S. market 2006 X3's were equipped with a version of the 'M' technik body kit with unpainted door sills and wheel arches.

U.S. spec Sport Package 2006 X3's received the full 'M' body kit (with painted front, side and rear plastic) available internationally as a factory accessory.

2.5i was removed for sale from the U.S. and Adaptive headlamps and a panoramic sunroof were made available, as well as upgraded dashboard components and leather seating.

[22][23][24] For this generation, production moved from Magna Steyr in Austria to at BMW's United States plant in Greer, South Carolina.

These include carbon fibre mirrors, a sport steering wheel, M rims, black kidney grilles and Aluminium pedals.

[36] In 2013 model year (produced in April 2012 and delivered in May 2012), a turbo four cylinder xDrive28i was introduced as replacement for the inline six xDrive28i, with new features such as standard Auto Start/Stop, Driving Dynamics Control with ECO PRO, New Driver Assistance Package (includes Lane Departure Warning).

In 2013, the F25 X3 xDrive28d model joined the X3 line-up, powered by a 2.0L turbocharged inline four-cylinder diesel engine, again first introduced on the BMW 3 Series (F30).

Changes include new modified twin circular headlights (optional LED headlights), redesigned kidney grille, new front, and rear bumpers, and exterior mirrors with integrated turn signal indicators; a centre console with the optional automatic climate control system in high-gloss black-panel look, new cup holders with a sliding cover for the centre console, new exterior colours, upholstery designs, interior trim strips, and light-alloy wheels; new xLine equipment package, optional Smart Opener for the automatic tailgate and storage packages.

Vehicles with Diesel engine sold in the United States were since end of 2008 equipped with selective catalysator using Diesel exhaust fluid (DEF) to reduce NOx emissions, while vehicles sold in Europe had a bypass exhaust pipe only.

[59] In July 2018, BMW introduced the ability to option the X3 with the sDrive intelligent rear-wheel drive system.

These include a spoiler, sport steering wheel, carbon fibre vents and kidney grilles.

[70][71] It will not be available in Taiwan, United States, and Canada, reportedly due to the vehicle's limited range and sole rear-wheel-drive configuration for the North American market.

The iX3 is powered by a single electric motor on the rear axle that produces 210 kW (282 hp) and accelerates from 0–100 km/h (0–62 mph) in 6.8 seconds.

It does not feature rare-earth materials in its construction and allows BMW to significantly reduce production costs over the old model.

[76] The batteries consists of 188 prismatic cells and are positioned on the floor, lowering the centre of gravity by 75 mm.

[77] The fourth generation of the X3 was officially unveiled on 19 June 2024 and set to commence production later in 2024, with a planned market launch in North America in the final quarter of 2024.