[4] The drivetrain received an upgraded transmission, rear disc brakes, and for the first time on a factory Mustang, 17-inch unidirectional wheels.

To celebrate Ford Mustang's 30th anniversary in 1994, a trio of SVT Cobra convertibles served as pace cars for the 78th Indianapolis 500 race on May 29, 1994.

A new vertical spat was added to the leading edge of each rocker panel extension to prevent rock damage to the lower body.

The Cobra's 5.0 L V8 was replaced with an SVT modified version of Ford's 5.8 L Windsor V8, re-engineered to have a power output of 300 hp (224 kW; 304 PS).

Additional changes included heavy-duty progressive-rate springs, thicker stabilizer bars, and a front strut tower brace.

The 1995 R was available only in white with a saddle cloth interior, each with a unique center-tiered fiberglass hood designed to clear the engine and induction system.

For the 1996 model year, Ford retired the aging 302 cu in (4.9 L) "5.0" V8 in the Mustang GT and SVT Cobra, with a new aluminum 4.6 L DOHC modular unit that was smoother and had slightly better fuel economy.

[1]: 38 The modular engine's aluminum block was cast in Italy by Teksid, a firm that produces parts for Ferrari and Formula One racers.

To promote the technological advances and mechanical achievements of its new modular engine, Ford introduced the Mystic Cobra for the 1996 model year, featuring a color-shifting paint formulated by BASF.

Utilizing color-shifting ChromaFlair pigments from Flex Products, the Mystic paint shifted from green to amber to gold to purple depending on the angle and the availability of light.

Ford replaced the intake manifold, certain computer components, and the exhaust system from the catalytic converters to the tailpipes to achieve a "true" 320 hp at the crankshaft.

[1]: 152–3  However, independent dyno tests showed that the Cobra R produced rear-wheel output that nearly matched both of those numbers, suggesting the engine may have been underrated.

[19] All 300 units produced were finished in Performance Red with a Dark Charcoal interior with cloth Recaro bucket seats.

[1]: 78 [7]: 297  This model also used Bilstein shocks and struts, Brembo 4-piston front calipers with 13-inch rotors were cooled by large ducts, along with a race-style fuel cell that protruded under the Mustang V6-style rear bumper.

[1]: 78 [7]: 296–7  The hand-built SVT engine employed special DOHC cylinder heads, a "trumpet-style" intake manifold, aggressive camshafts, short tube headers connected to Cobra catalysts, a Bassani X-pipe, and a unique Borla dual side-exiting exhaust system, which was necessitated by the large fuel cell.

[1]: 153 Aftermarket performance parts vendors contributed to this project, including Recaro, Brembo, McLeod, Eibach, BF Goodrich, Tremec, Borla, Dana, Federal Mogul, and K&N.

The standard cloth Recaro bucket seats had a stylized red "R" with an intertwined Cobra logo embroidered on the front seatbacks.

The Cobra emblem on the front seatbacks was embroidered in a somewhat darker color than the suede inserts to provide a subtle contrast.

Approximately 100 vehicles were partially built in the US and shipped to Australia for right-hand-drive conversion and final assembly by Ford Tickford Experience (FTE).

This was part of a $4 million program by Ford Australia[21] to combat the rival Holden Monaro, which eventually formed the basis of the 2004–2006 Pontiac GTO in the U.S. Debuting in the spring of 2002, the 2003 Cobra came with a supercharged, 32-valve DOHC, 4.6-liter V8 engine rated at 390 hp (291 kW) and 390 lb⋅ft (530 N⋅m) of torque.

[22] Code-named "Terminator" by the SVT development crew led by John Coletti,[18]: 22  numerous improvements were made to the powertrain and driveline to handle the power increase from the previous model's set-up.

A cast-iron block was used, instead of the previous Teksid aluminum unit, with stronger internals including Zollner pistons and forged Manley H-beam connecting rods that were modified with a wrist pin oiling hole by the SVT engineers.

[22] These upgrades were critical in order to support the 8 psi (0.55 bar) of boost delivered from the stock Eaton M-112 roots-type supercharger.

[22] Other improvements included the use of a lightweight aluminum flywheel connected to a Tremec T-56 six-speed transmission, 3.55:1 rear axle ratio, and stronger 31-spline half-shafts with revised upper and lower control arms.

[18]: 24–5  These exterior differences included a new front fascia with an integrated spoiler and front brake air ducts, a new rear fascia with a black insert that visually integrated the exhaust pipes, a composite hood with dual functional heat extractors, newly designed side scoops, and foldable side-view mirrors painted in the matching body color.

SVT also introduced new five-spoke 17x9-inch wheels, available in standard machined-faced aluminum with metallic argent-painted pockets or optional chrome.

[22][1]: 61  Also included were special carbon fiber-patterned leather wrapped around the shifter; emergency brake handle; and on the steering wheel at the 10, 2, and 6 o'clock positions.

The limited-edition 2004 Mystichrome Cobra debuted at the 2003 New York International Auto Show[28] alongside the 2004 40th Anniversary Mustang GT and V6 models.

SVT worked with Garden State Tanning to produce the Mystichrome leather[8]: 76  found on the car's seat inserts and the steering wheel at the 10, 2, and 6 o'clock positions.

[26] A definitive history of the Terminator Cobra and John Coletti's SVT operations was captured in the non-fiction book Iron Fist, Lead Foot by Frank Moriarty.