Unveiled at Detroit, MI Cobo Hall on June 16, 1998, the redesigned WJ 1999 Grand Cherokee shared just 127 parts with its predecessor (mostly fasteners) and took 28 months to develop from its March 1996 design freeze (styling approval in Q3 1995). The spare tire was relocated from the side of the cargo compartment to under the floor. The two heavy pushrod V8 engines were replaced by Chrysler's then-new PowerTech. The new V8 engine produced less torque than the old pushrods, but was lighter, offered better fuel economy, and provided similar on road performance figures (the 23-gallon fuel tank was replaced with one of a 20.5-gallon capacity). The Inline 6 engine was also updated for MY1999. A redesign of the intake manifold added 10 horsepower (7.5 kW). While other Jeep vehicles used the Mopar 5 x 4.5 bolt circle, this was the first Jeep following the 1987 Chrysler buyout to receive a wider wheel bolt pattern: – 5 x 5 - (metric 5 x 127mm).

A notable feature available in this generation was the automatic four wheel drive option called Quadra-Drive, which employed the New Venture Gear NV247 transfer case. This two-speed chain-driven transfer case uses a gerotor, a clutch pack coupled to a hydraulic pump, to transfer torque between the front and rear axles. The transfer case contains three modes, 4-All Time, Neutral, and 4-Lo. In 4-All Time, 100% of torque is sent to the rear axle in normal conditions. If the rear axle starts spinning at a higher rate than the front axle, hydraulic pressure builds up in the gerotor and causes the clutch pack to progressively transfer torque to the front axle until both axles return to the same speed. Neutral mode is intended for towing the vehicle. In 4-Lo, the front and rear axles are locked together through a 2.72 reduction gear ratio. The NV247 transfer case is mated to front and rear axles containing Jeep's Vari-Lok differentials. Vari-Lok differentials also use a gerotor to transfer torque between the wheels on either side of the axle. The major advantage of Quadra-Drive was that the combined transfer case and progressive locking differentials in each axle could automatically control traction between all four wheels. However, only the center differential could be permanently locked, and only in 4Lo. The Quadra-Trac II system included the NV247 transfer case with the standard open front and rear differentials.

The 45RFE and 545RFE automatic transmission in the WJ was notable. It included three planetary gear sets rather than the two normally used in a four-speed automatic. This gave it six theoretical speeds, and it would have been the first six-speed transmission ever produced in volume, but it was programmed to only use five of these ratios. Four were used for upshifts, with a different second gear for downshifts. Although five of the six ratios were used, Chrysler decided to call it a "4-speed automatic". In 2001, the programming was changed to make use of all six ratios. Rather than have six forward gears, the transmission was programmed to act as a five-speed with the alternate second gear for downshifts. The rpm at 70 miles per hour (113 km/h) on a 545RFE is 2000 rpm, 200 rpm less than the 45RFE programming. 1999 and 2000 model year WJ owners can have their 45RFE transmission's programming flashed to enable the extra gear as both transmissions are physically the same. The 42RE 4-speed automatic remained the transmission for the Inline 6 engine. It had slight changes from the previous model Grand Cherokee.

The interior was also completely redesigned. The redesign allowed for larger rear doors, and more space for rear passengers. Controls for various items like headlights, heated seats, and rear wiper were moved to more convenient locations. The electronic Vehicle Information Center was moved from below the radio to above the windshield, and was standard on all 2000 and up models. Limited models included automatic dual-zone climate control. A CD-changer with capacity for 10 CD's was also available with the Infinity Audio package.

In addition to Jeep's UniFrame construction, Daimler Chrysler partnered with Porsche to further strengthen the frame.[citation needed] This was done to reduce noise, vibration, and harshness (NVH). UniFrame is an unusual construction scheme, it incorporates all of the strength and durability of a body-on-frame construction into a unitized construction. By adding stiffness and rigidity to the structure, they enhanced the ride and strengthened the network of steel beams, rails and pillars (or "safety cage") that surround and protect occupants. More than 70 percent of the underbody is high-strength steel. All Jeep Grand Cherokees feature UniFrame construction.

The Grand Cherokee received a secondary minor facelift for 2004 including round fog lamps, a lower front fascia and a new body-color matched inset grille design.

Export models produced at the plant in Graz, Austria, were given the vehicle designation of "WG", which feature minor differences from the US model, including a relocated radio antenna (moved from front right fender to integrated on rear passenger side window), power folding mirrors, height adjustable headlights, plastic rocker covers on Limited trim models (only available on Laredo trim on US models), as well as leather shift knobs on Overland trim models. Chrysler also claims the vehicle received other improvements to reduce "NVH". "WG" models were also manufactured at the Cordoba plant for the Argentinian market.