Released in January 2006, the third-generation Estima used the front platform of the RAV4 and an originally designed rear platform as its base. This composite platform was also employed for the second-generation Alphard and the first-generation Vellfire (both released in May 2008). The engine was either a newly developed 3.5-liter V6 280 PS unit (2GR-FE) or a 2.4-liter inline 4-cylinder unit with an enhanced output of 170 PS. While the seating capacity was the same as before at seven or eight passengers, it became possible to stow the third-row seats under the floor, further improving the utility. The 7-seater model featured the second-row seats with a long sliding range of 800 mm, providing ample legroom when the third-row seats were stowed under the floor.

The transmission for the 3.5-liter model was a 6-speed automatic with the sequential shiftmatic system, and the 2.4-liter model featured a 7-speed Super CVT-i transmission, also with sequential shiftmatic. The drivetrain configuration was either front-engine, front-wheel-drive or 4-wheel-drive. A hybrid model joined the third-generation Estima lineup in June 2006, with an upgraded THS II hybrid system to develop a combined engine/motor output of 190 PS, offering improved driving performance and fuel efficiency. The 2.4-liter 4-cylinder engine (2AZ-FXE) was dedicated to the hybrid model, with the 2JM motor for the front and the 2FM motor for the rear. The battery for the hybrid system was moved to the underside of the console box between the front seats, allowing greater flexibility in seat arrangements.