The Publica was a small passenger car for general consumers, developed partly in response to the "people's car" concept that was put forward in 1955 by the Ministry of International Trade and Industry (today's Ministry of Economy, Trade and Industry). Since many of the requirements for the people's car were practically unattainable for automakers of the time, however, Toyota drew up a set of requirements for a more realistic minimum-sized car to work on.

At the time, the rear-engine, rear-wheel-drive (RR) configuration was the mainstream for the smallest class of passenger cars and minicars. Toyota initially experimented with a front-engine, front-wheel-drive (FF) configuration, however, as it was theoretically ideal for small cars. In the end, Toyota chose a front-engine, rear-wheel-drive (FR) layout, and overcame many difficulties to solve two critical problems associated with FR: vehicle weight and cabin space.

For example, a compact air-cooled horizontally opposed 2-cylinder engine was employed to reduce the weight, and the propeller shaft was positioned as low as possible. As a result, the Publica's curb weight came to 580 kg, one of the lowest in its class. It was priced at 389,000 yen, which was well within the reach of average workers. However, the Publica's practical yet frugal interior and exterior equipment disappointed many consumers, who sought an image of luxury in their cars. The sales of the Publica continued to undershoot the target, until a deluxe version was added to the lineup two years after Publica's debut. In April 1966, the front and rear of the body were substantially remodeled, and the engine was replaced with a more powerful 800 cc unit producing 36 PS. In September 1967, the Publica Super version joined the lineup, equipped with the engine for the Toyota Sports 800 that produced 45 PS.

The most affordable model of the Publica 800 was priced at 359,000 yen. As the exchange rate was 360 yen to the dollar at the time, the Publica was dubbed the 1,000 dollar car.