The fourth-generation Hiace was released in August 1989. A major change in the mechanical components was that of the engine lineup, which included newly developed gasoline engines (2-liter 1RZ-E and 1RZ units and a 2.4-liter 2RZ-E unit), and a 2.8-liter diesel engine (3L) that was fitted to all 4-wheel-drive (4WD) models. In answer to rising demand for high-grade 1-box multi-purpose vehicles, the Hiace featured luxurious internal and external equipment and design. As a result, the Hiace wagon solidified its position as a luxurious 1-box multi-purpose vehicle, while the Hiace van incorporated further improvements to become a more user-friendly commercial-use vehicle.

The Hiace had also been used as a base platform for ambulances due to its suitable size and high reliability. In May 1992, the Toyota Himedic was introduced as a high-grade ambulance built on the Hiace platform and equipped with the V8 engine developed for the Celsior. In August 1993, the 4WD models changed the drivetrain configuration from a part-time system using a transfer case to a full-time system without a center diff lock and a sub transmission.