The W123 models surpassed their predecessor, the Mercedes-Benz W114, as the most successful Mercedes, selling 2.7 million units before production ended in the autumn of 1985 for the saloon/sedan versions and January 1986 for coupés and estates/station wagons.

[4] Following a slow production build-up during the first year, customers who placed their orders faced a lengthy waiting period of nine to twelve months.

[8][9] Once the W123 reached the end of its service life, they were often shipped to Africa and third world countries where they were highly esteemed for their ability to travel on rough roads and to not require frequent maintenance.

The design is updated with styling cues from its larger sibling, Mercedes-Benz W116, namely wider ribbed taillights, horizontal headlamps, front turn signal indicators on the outer edge, and pull-to-open door handles.

Design goals according to chief engineer Hans Scherenberg included creating a "balanced, dynamic, non-aggressive form – one that lends these vehicles a special character – by emphasizing horizontal lines both at the front and rear, suggesting a slight wedge shape from the side aspect, reducing the use of chrome trim and, in the truest sense of the term, introducing rounded lines,” Scherenberg said.

“We are as unimpressed by revolutionary leaps of style as by fashionable gimmicks.”[12] The interior is revised with a larger instrument panel, central round ventilation outlets, HVAC (Heating Ventilation Air Conditioning) control panel and a single row of control switches in the centre.

If the optional air conditioning unit was ordered, a temperature roll dial was fitted to the row of control switches.

This setup is the same for North American models with the sealed beam units and glass plate partially covering the headlamp housing.

[13] The limousine was built on a stretched W123 saloon/sedan chassis with additional lower side panels behind the rear passenger doors.

The stretched limousine version was offered with complete front body clip (B-pillar forward) and strengthened chassis as the base for ambulances or hearses to be built by the conversion specialists such as Binz and Miesen.

[13] The world's first turbocharged diesel engine for a passenger vehicle, the OM617 A, was finally introduced in W123 models in September 1979, exclusive to the 300TD Turbodiesel for the European market.

One notable achievement was in the 28,200 km (17,500 mi)[18] 1977 London–Sydney Marathon rally, where the 280E won first and second, ahead of the third and fourth place Citroën CX.

All of the models had to comply with stringent Environmental Protection Agency (EPA) automotive emission control regulations on performance and US Department of Transportation on features.

For this reason if the 280/280E models in Europe were additionally punctuated by elegant chrome bumper sides and square headlights, then North American could not enjoy this.

The corresponding North American car, depending on MY (as Mercedes was forced to constantly alter the performance), and state (California had their own regulations for 1977 and 1977 MY), 1980 280E weighed 1565 kg and its power capped to 142 PS at 5500 and 197 Nm at 4500.

With the corporate average fuel economy (CAFE) regulations continuously rising, Mercedes dropped the petrol powered 230 for 1979 MY and the 280E and 280CE for 1982 to avoid paying heavy penalties on every sale.

Customers could choose cloth, MB-Tex vinyl, velour or leather for the upholstery as well as interior wood trim for dashboard and centre console.

The driving dynamic enhancement options for extra cost became more extensive over the time: ABS (from August 1980 onward), self-locking differential gear, five-speed manual gearbox (introduced in 1982 for European markets only), Tempomat cruise control system, power steering system (standard from 1982 onward), passenger-side external rear view mirror (standard on S123 model), "Alpine" horn with selectable loudness (popular in Switzerland due to strict noise regulations), retractable steering column (from 1982 onward) and so forth.

For the first time in an executive saloon from Mercedes-Benz, the W123 had the option of fully automatic climate control at extra cost.

The car was praised for its technical sophistication, safety innovation, and performance as well as its thorough engineering and high build quality.

Downsides were typically limited to complaints about the car's high price or the relative austerity of its equipment (manually adjustable seats, for example) compared with contemporary American vehicles at the time.

Reviewers noted the accurate steering and "a beautiful balance between comfort and control" in the test vehicle, a US-specification 280E.

Also noted was the seamless integration of safety features such as a diagonally-bending steering column and 25% larger mirrors compared with the previous model.

A new five-speed manual gearbox was introduced in February 1982 and was available in all models except those with the 3-litre turbocharged diesel engine but not in North America.