In 2000, following a partial redesign to improve system output and fuel efficiency, the first-generation Prius was released in the United States and Europe. Then, in September 2003, the second-generation Prius was launched featuring THS II, which improved on all aspects of the earlier system. THS II used a high-voltage power circuit to largely increase motor output and was designed to take both driving and environmental performance to a new level.

There was also an accelerated development of hybrid models to follow the Prius: 2001 saw the sales launch of the Estima Hybrid minivan and the simply structured Crown Mild Hybrid; in 2003 came the release of hybrid versions of the diesel Dyna and Toyoace trucks, followed in 2005 by the Harrier Hybrid SUV (known outside Japan as the Lexus RX 400h). The available vehicle types of hybrid vehicles thus grew in variation. The Lexus brand also pushed forward with sedan-type hybrid models, releasing the GS 450h in 2006, the LS 600h series in 2007, and the HS250h in 2009.

Production of hybrid vehicles also started outside Japan at major production bases around the world. The first hybrid vehicle production outside Japan began in 2005 in China, with the start of knockdown production of the Prius at Sichuan FAW Toyota Motor Co., Ltd. In 2006, a Camry Hybrid to be exclusively sold outside of Japan went into production at Toyota Motor Manufacturing, Kentucky, Inc. The Camry Hybrid also went into production in Thailand and Australia from 2009 and in China from 2010. Also, in the same year, Europe's first Toyota hybrid production began with the Auris Hybrid at Toyota Motor Manufacturing (UK) Ltd.

Toyota's plans for market rollout of hybrid vehicles were presented by TMC President Katsuaki Watanabe at the Toyota Environmental Forum in 2006 and 2008. At the 2006 forum, President Watanabe declared a policy of increasing yearly production to 1 million units in the early years of the decade starting from 2010, while at the 2008 forum he presented a policy of giving all passenger vehicle series a hybrid version by around 2020. As for hybrid vehicle sales, in May 2007, approximately 10 years after the launch of the first-generation Prius, cumulative worldwide sales reached 1 million units. The pace of market penetration of hybrid vehicles increased in tandem with the expansion of vehicle models, allowing cumulative worldwide sales to reach 2 million units only two years and four months later in September 2009, and 3 million units in February 2011.