The first-generation Altezza (codename XE10) was launched in Japan in October 1998, while the Lexus IS 200 (GXE10) made its debut in Europe in 1999 and in North America as the IS 300 (JCE10) in 2000.

Introduced in 1998 with the AS200 (chassis code GXE10) and RS200 (chassis code SXE10) sedans, the compact vehicle was produced using a shortened, front-engine, rear-wheel-drive midsize platform,[9] allowing Japanese buyers to take advantage of tax savings imposed by Japanese government regulations concerning vehicle engine displacement (but not exterior dimensions, as the car was 20 mm wider than the 1,700 mm standard), and adapted parts from the larger second-generation Aristo/GS.

[11] The styling cues of the rear lamp clusters on the first-generation models were copied by a number of after-market accessory manufacturers for applications on other vehicles.

[12] The taillight style became so popular, that it influenced the development of clear-covered LED taillamps that only revealed their colour when illuminated.

[13] Visually the exterior of the European IS 200 Sport and 300 were almost identical, the only differences being the boot insignia and the larger-engined model initially having clear front indicators (later generalized throughout the range).

For the European and Australian markets, the IS 300 gained full leather seats rather than the leather/ecsaine of the 200, plus Auto-dimming rear view and side mirrors, and HID headlamps.

[18] In Europe, the lack of a manual gearbox option for the IS 300 may have limited sales in contrast to its rivals, the BMW 3 Series and the Mercedes C-Class.

The second-generation IS marked the next introduction of Lexus' L-finesse design philosophy on a production vehicle, following the premiere of the 2006 GS executive sedan.

The sedan's exterior design featured sleeker, coupé-like contours, a fastback profile, and a repeated arrowhead motif in the front fascia and side windows.

All second-generation IS models offered a more typical Lexus interior compared to the previous generation with a focus on luxurious amenities.

The interior is equipped memory leather seats, lightsaber-like electroluminescent instrument display lighting and LED interior lighting accents, the choice of faux-metallic or optional Bird's Eye Maple wood trim (aluminium composite on the IS F), and SmartAccess keyless entry with push-button start.

[36] Options ranged from touchscreen navigation with backup camera to a Mark Levinson premium sound system and Dynamic Radar Cruise Control.

[42] The IS line later took a median position in the entry-luxury market; in 2008 it sold behind the variants of the BMW 3 Series, Mercedes-Benz C-Class, and Cadillac CTS, and ahead of the Acura TL, Audi A4, and Infiniti G sedan.

In 2010, coinciding with the second IS line refresh, the revised diesel IS 220d was detuned for improved fuel consumption figures but lowered power output by 27 hp (20 kW; 27 PS).

Changes to the IS C include Intelligent Transport Systems and Dedicated Short Range Communication units become standard equipment.

Change to Japan F SPORT Package includes dark rose interior colour, medium silver ornament panel.

[51][52] Changes to IS F include a carbon fibre rear spoiler, front LED fog lamp, all sports seats include embossed 'F' logo at head rests, Alcantara upholstery door trim and center console, standard Intelligent Transport Systems, and Dedicated Short Range Communication unit.

IS F Dynamic Sport Tuning model (available in Japan) includes 7 PS (5.1 kW; 6.9 hp) engine power increase via low-friction piston and pump, strengthened body contact, carbon fibre front spoiler/rear diffuser, 7 kg (15 lb) lower body weight via titanium muffler, orange colour brake caliper with LEXUS logo, orange accent engine headcover, carbon interior panel on the centre console and door switch base with nameplate, choice of 7 body colours including starlight black glass flake.

Main features include a 2.5-litre four-cylinder Atkinson cycle petrol engine with D-4S direct injection technology, water-cooled permanent magnet electric motor, 3 LED-projector headlamp design, Daytime Running Lights (DRLs) integrated into the upper bumper surface, rear spoiler integrated within the boot lid, L-shaped combination lamps with three-dimensional design, Fluid Titanium body colour, 2-zone dashboard, seats, door panels and instrument binnacle hood upholstered in amber leather.

[citation needed] The IS AWD versions use a full-time all-wheel drive system that utilizes a planetary gearset center differential coupled with a multi-disc clutch to act as the slip limiting device.

It debuted at the April 2016 Beijing Auto Show with interior technology improvements including 10.3 inch infotainment screen, updated steering wheel, and contrast stitching along the dash.

Joining the options list is adaptive front lighting, which turns the headlights with the steering wheel to improve visibility.

Android Auto and Apple CarPlay capabilities were made available, as well as upgraded driver-assistance systems and standard blind-spot monitoring.

[citation needed] Following the introduction of stricter crash safety regulations, the IS, along with the CT hatchback and the RC coupe, were pulled out from the Australian market in November 2021.

[citation needed] The IS, along with the CT and RC, was discontinued in Europe in 2020 due to poor sales figures, fierce competition from European rivals, and a shift in the market towards Crossover SUVs.

[98][99] For 2023, the IS 500 F Sport Performance Premium offers an exclusive Special Appearance Package with Molten Pearl exterior paint, Black NuLuxe interior, 19-inch Matte Black BBS forged alloy wheels, unique color-matched floor-trimmed mats and matching key gloves.

In 2001, Team Lexus entered three IS 300s in the third race of the 2001 Grand-Am Cup season at Phoenix, Arizona,[108] and won their first IS 300 victory that year at the Virginia International Raceway.

[112] In 2009, The Project Bandoh WedsSport IS 350, driven by Manabu Orido and Tatsuya Kataoka, won both driver and team title in the GT300 class that season.

[116][117] Kazunori Yamauchi is the developer of Gran Turismo series,[117] of which the IS line is playable in several versions, and the IS F racer carried test equipment for future game modes.

The car, which was a victim of the 2011 Japan earthquake and tsunami and due to be scrapped, was purchased by Saito and heavily customized for drift racing use.