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At the 2004 North American International Auto Show, Ford introduced a completely redesigned Mustang which was codenamed "S-197" and based on an all-new D2C platform for the 2005 model year. Developed under the direction of Chief Engineer Hau Thai-Tang and exterior styling designer Sid Ramnarace, the fifth generation Mustang draws inspiration from Mustangs of the 1960s. It was this redesigned aesthetic that inspired Ford's Senior Vice President of Design, J Mays, to call it "retro-futurism." The 2005 Mustang's unique retro coupe styling complements its muscle car status with an approximate weight to power ratio of 11.5:1. The current Mustangs are manufactured at the AutoAlliance International plant in Flat Rock, Michigan.

The base Mustang, equipped with a 5-speed Tremec T-5 manual transmission, is powered by a cast iron block 210 hp (156 kW) 4.0 L SOHC Ford Cologne V6 engine, replacing the 3.8 L pushrod V6. The Mustang GT features a more rugged Tremec TR-3650 transmission with an aluminum 300 hp (224 kW) 4.6 L 3-valve Modular V8 with variable camshaft timing. 2007's Shelby GT, based on the standard GT model, is modified by Carroll Shelby International to produce 319 hp (238 kW) by means of a Ford Racing air intake, performance tune, and upgraded exhaust system.^[9] The 2007 Ford Shelby GT500 is equipped with the Tremec TR-6060 transmission, sporting a durable cast iron block generating 500 hp (373 kW) from a supercharged 5.4 L DOHC 32-valve V8 engine.^[10]

The 2006 Shelby Mustang GT is capable of performing a quarter-mile test in 13.5 seconds, with acceleration from 0-60 mph in 4.9 seconds.^[11] Added to the rear suspension is a three-linked system which controls the vertical and lateral movements of the axle. All model years of the current Mustang retain a live axle rear suspension providing the benefits of reduced cost and weight over a heavier, more expensive and complicated independent rear suspension, at the expense of handling. Ford has drawn heavy criticism from the motoring journalism community for the decision to equip the current Mustang with the live axle system, due to the poor handling that results. At a press conference, Ford stated that to include a modern suspension system would have added $5,000 to the showroom price of the car. The current Mustang GT also comes equipped with a limited slip differential complete with the same carbon-fiber clutch discs used in the 2003 to 2004 SVT Cobra and the 2007 Shelby GT500. The differential is designed for the 31-spline axles and the 8.8 inch ring gear. The basic V6 model (without the Pony Package), unlike the V8 GT model, lacks a rear anti-sway bar to prevent severe oversteer on hard cornering. The 2007 Mustang V6 and GT chassis, suspension, and body shares many of the same construction designs as the GT500. Thicker sheetmetal support and extra welds can be found on the 2007 chassis. Re-designed strut towers on the 2007 Mustang accommodate the wider 5.4 L 32-valve V8 engine in the GT500. The rear diffuser on the 2007 GT California Special package (GT/CS) is also found on the Shelby GT and GT500.

The Pony Package for the V6 Mustang became available starting in 2006. This option includes upgraded suspension, Bullitt-style wheels (originally only available on the GT), wider tires, a unique grille design with fog lamps, a rear deck spoiler, and unique door striping and emblems. Unlike previous V6-powered Mustangs, the current V6 Mustang has drawn a large aftermarket following. A notable example is Shelby Automobile's Shelby CS6 package for the V6 Mustang, specifically the Paxton supercharger, which increases the power of the V6 up to 350 hp (261 kW).

The Mustang sports additional optional features including: MyColor (a color-configurable instrument cluster available as part of the Interior Upgrade Package), Shaker 500 (500 watts peak output) CD/MP3 6-disc audio system, Shaker 1000 (1,000 watts peak output) CD/MP3 6-disc audio system, and brushed aluminum panels (also part of the Interior Upgrade Package). In 2007, even more options were offered including a DVD-based GPS navigation system made by Pioneer (late availability), power passenger seats, heated seats, revised interior colors, and Sirius satellite radio. The GT Appearance Package made its debut in 2007 as well. This package adds a non-functional hood scoop, bright rolled exhaust tips and an engine cover featuring the pony emblem.

 

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