As company-wide attention focused on exhaust gas countermeasures, the members of the Design Department adopted a somewhat angular, sharp design for the third generation Corolla. The new design portrayed a somewhat robust image compared to the soft lines of the second generation, and the Corolla's individual flare was emphasized. Also, wind tunnel equipment was introduced around this time, making it possible to tweak the design based on drag coefficient figures. Results from these wind tunnel studies were incorporated into the exterior design for the first time in the history of Corolla.

In addition to the sedan and van that were available with the previous models, a center pillar-less hardtop body was newly adopted for the third generation Corolla. This marked the first time a hardtop design, which was a trend in higher grade models, was adopted on a family car — this feature became a major characteristic of the third generation model. When the new model was first released, the coupe model was temporarily discontinued in order to clearly define the new Corolla from other vehicle segments, but was later added due to market demands. Also, a liftback model (also known as a hatchback) was added to the lineup as a "sporty wagon for multipurpose use." The liftback gained popularity overseas, more so than in the domestic market, and the production volume greatly exceeded the initial plan.

At the time that the third generation Corolla was released, Japan was experiencing a social environment that was not very conducive to cars, and sales did not grow like anticipated. However, overseas sales significantly exceeded the initial plan, and record-setting figures were achieved in annual exports. This was clearly the result of developments that pursued international quality standards and firmly grasping the needs of overseas markets. For instance, when Sasaki, the Chief Engineer, conducted a market research trip in Germany, a lack of cargo capacity was pointed out. An actual demonstration was made in front of Sasaki's eyes to show that a standard load of cargo simply wouldn't fit in the trunk. Sasaki immediately studied vehicles that served as the standard for ease of trunk use in overseas markets and reflected those findings in developments.
In addition, the expansion of an ambitious product lineup that matched the needs of the era, including a hardtop and liftback model, led to favorable results overseas. In the end, this model achieved a total production volume of 3,755,029 units.

A total of three body types were available when the third generation Corolla was first released, including the traditional sedan (2-door and 4-door), van and the newly added hardtop. Later liftback and coupe models were added to the lineup for a total of five body types.

At the time of its initial release, four types of engine variations were available, including the 1.2-liter 3K-H engine, the 1.4-liter T engine, the 1.6-liter 2T engine and the 2T-G DOHC (Double Over Head Camshaft) engine for the Corolla Levin.

However, these engines were temporarily deleted from the lineup due to emissions regulations, leaving only the 1.6-liter 2T-U engine and the 1.4-liter T-U engine. After that, the lineup was gradually enhanced with the 1.2-liter 3K-U engine, the 1.6-liter 12T and 12T-U engines, the 1.3-liter 4K-U engine and the 2T-GEU DOHC engine for the Corolla Levin.