Two types of body variations were available when the seventh generation model initially was released, including the sedan and 2-door coupe (Corolla Levin), and later the wagon and van were added to the lineup. The following year, the 3-door hatchback (Corolla FX) and the 4-door hard top (Corolla Celles) were added simultaneously for a final total of six body variations.

Gasoline engines were available in five types including the 1.3-liter 4E-FE, the 1.5-liter 5A-FE, the 1.6-liter 4A-FE, the Sports twin cam 4A-GE and the supercharged 4A-GZE. For the diesel engine, the 2.0-liter 2C was adopted, for a total of six engine types.

The design of the seventh generation focused on an image with an abundance of curves. Body panels were deeply drawn toward the body ends, giving this model a rich body design that expressed a high class family sedan style with the image of luxury and driving performance. While emphasizing high quality, many characteristic traits of the Corolla were retained as well. Notable features included large irregularly shaped headlamps, horizontal radiator grille and integrated front bumper designed for maximum cooling performance and aerodynamics. The interior, as well, took on a curved theme and achieved a dramatic increase in the level of design and material quality. The instrument panel was configured from smoothly curved lines, and four round meters with good visibility were adopted. The safety pad in particular was designed with a large, integrated form with minimal gaps and parting lines, further enhancing the high quality image.

All gasoline engines of the seventh generation Corolla were designed as EFI-equipped (Electric Fuel Injection) double overhead cam engines. These EFI and twin cam engines were called second generation "High-mecha twin cam" engines. Notable characteristics included the designed head cover, surge tank and hydraulic engine mounts adopted on all vehicles to contribute to superior NV (noise and vibration) performance.

The 1.3-liter 4E-FE engine was developed based on the conventional 2E engine, converted to EFI and "High-mecha twin cam" configuration with increased displacement. This engine generated a maximum output of 100ps/6600rpm and a maximum torque of 11.8kg-m/5200rpm.

The 1.5-liter 5A-FE engine — inherited from the sixth generation — incorporated new designs in various areas around the cylinder head, and a maximum output of 105ps/6000rpm and a maximum torque of 13.8kg-m/4800rpm were generated. By optimizing the intake port shape in particular, an air swirl was generated inside the combustion chamber for efficient combustion, and high output was achieved. In addition, a knock control was incorporated in the engine control system to suppress knocking and to achieve optimal ignition timing and combustion at all times. Furthermore, torque control was adopted in automatic transmission models to reduce the shift shock that occurs when changing gears, and an engine profile with mild, easy to handle output and torque was achieved.

The 1.6-liter 4A-FE engine adopted a dual exhaust manifold to improve performance and generated a maximum output of 115ps/6000rpm and a maximum torque of 15.0kg-m/4800rpm. The Sports twin cam 4A-GE with the same 1.6-liter displacement underwent modifications to the extent that it could be called a newly designed engine. Output improvements were targeted, and the intake volume was increased by adopting a 5-valve design with three intake valves and two exhaust valves per cylinder. In addition, agile response like that of a sports engine was achieved using four independent throttle valves — one for each cylinder. Also, a Variable Valve Timing (VVT) system was adopted for the intake side camshaft to supplement low and medium speed torque, and a maximum output of 160ps/7400rpm and a maximum torque of 16.5kg-m/5200rpm were generated, realizing a sporty engine beyond that of the past. No major changes in particular were made to the supercharged 4A-GZE engine that was continued from the sixth generation Corolla, but minor changes were made to the exhaust system, and a maximum output of 170ps/6400rpm and a maximum torque of 21.0kg-m/4400rpm were achieved.

For the diesel engine, the 2.0-liter 2C-III diesel engine was adopted. This was the engine available on the 4WD (four wheel drive) models of the sixth generation. For the seventh generation Corolla, this diesel engine was optimized for use in FF (front engine, front wheel drive) vehicles by altering the valve timing and the shape of the exhaust manifold. A maximum output of 73ps/4700rpm and a maximum torque of 13.5kg-m/2800rpm were achieved.