The R marque refers to an unknown adjective, since Volvo markets R-designated vehicles as being the most performance-oriented trim level.

[4] For 1995, the special limited edition 850 T-5R was offered, and was a commercial success, leading Volvo to produce a second run in 1996.

The T-5R was renowned as a sleeper car; despite its boxy, understated appearance, it boasted a drag coefficient of 0.29 and was capable of accelerating from 0 to 60 mph (97 km/h) in 6.8 - 7.0 seconds (depending on transmission and body type).

The vehicle came standard with Pirelli P-Zero tyres, providing lateral grip of 0.88 g. The engine tuning was co-developed with Porsche, and the transmission and other powertrain components.

On the North American market only two options could be chosen, a trunk-mounted Alpine 6-CD changer and no-cost 16" wheels for a smoother, more comfortable ride and driveability in snow when using all-season tires.

The engine was rated at 250 metric horsepower (184 kW; 247 hp) and 350 newton-metres (258 lbf⋅ft) for models fitted with a five-speed manual gearbox and limited slip differential.

It was only available with a Haldex based all-wheel drive system and a 2.5L turbocharged five cylinder engine rated at 300 metric horsepower (221 kW; 296 hp) and 400 newton-metres (295 lbf⋅ft) of torque.

In 2008, Volvo began offering an R-Design variant on most of their vehicles, which includes sportier styling on both the exterior and interior, slightly more horsepower, and a firmer suspension.