Since its inception in 1966, the Corolla has steadily led the compact family car market in Japan. On the occasion of its first major model change in May 1970, the Corolla Sprinter model was spun off to form the Toyota Sprinter line, to be marketed through the Toyota Auto sales channel instead of the Corolla channel. The Corolla added a new coupé in its line, though the body was the same as that of the Sprinter coupé.

The second-generation Corolla became a size larger than its predecessor. A 4-door van was added to the body variations, which also included 2- and 4-door sedans, a 2-door coupé, and a 2-door van. The quarter windows were removed, while resin moldings were employed around the front grille and rear combination lamps to give the car a distinctive look. The cabin featured high-backed front seats with integrated headrests.

The second-generation Corolla initially inherited the inline 4-cylinder OHV 1,200 cc engine (3K) from its predecessor, to which Type T engines were added (OHV 1,400 cc/1,600 cc and DOHC 1,600 cc) midway through its model life, and eventually a choice of three engines with six variations were made available. Other mechanical components were also inherited from the previous model, except that a common MacPherson strut system without a transverse leaf spring was employed for the front suspension.