February 1995 saw the arrival of the Evolution 3, following a pre-release in 1993 which had several improvements over the previous models. New, more aggressive styling and a new nose moulding improved the air supply to the radiator, intercooler and brakes. New side skirts and rear bumper moldings and a larger rear spoiler were added to reduce lift. The engine was improved and had a higher compression ratio than before, and a new turbocharger compressor (65 mm to 68 mm), which resulted in a power output of 270 bhp (201 kW) at 6,250 rpm, 309 N⋅m (228 lb⋅ft) at 3,000 rpm.
A modified Evolution 3 appeared in the Initial D manga, driven by Emperor Leader Kyoichi Sudo. In the story, the car featured upgrades to the engine to produce 310 hp as well as an antilag (misfiring) system.