The second-generation Cresta that came out in August 1984 abandoned the pillared hardtop styling in favor of a more conventional sedan body with sash doors. The body height was reduced to the level of a hardtop, while inheriting from its predecessor such features as the vertical front grille and four rectangular headlamps. The interior design was the most luxurious among the three sister models (Chaser, Cresta, and Mark II). Both ends of the rear windshield were extended forward at a sharp angle until they reached the rear pillars, giving the rear windshield a characteristically 3-dimensional look.

Six engine variations were made available, including an inline 6-cylinder DOHC turbocharged 2-liter unit producing 145 PS (M-TEU), two 6-cylinder DOHC 2-liter units producing 160 PS (1G-GEU) and 130 PS (1G-EU), respectively, a 4-cylinder 1.8-liter unit with 100 PS (1S-U), a 2.4-liter turbo diesel with 96 PS (2L-T), and a naturally aspirated diesel with 83 PS (2L). The transmission could be chosen from a 4-speed automatic with 2-way overdrive, an electronically controlled 4-speed automatic ECT-S, and a 5-speed manual.

The second-generation model made ample use of electronics, with an electronically controlled suspension (TEMS) and 2-mode progressive power steering installed on the top-end Super Lucent grade model. In October 1985, the GT twin turbo model was introduced with a water-cooled turbocharged DOHC engine (1G-GTEU) with a maximum output of 185 PS, which replaced the M-TEU engine.