In February 1986, the bonds between the Celica and the Supra were cut; they were now two completely different models. The Celica changed to a front-wheel drive layout, using the Toyota "T" platform associated with the Corona, while the Supra kept its rear-wheel-drive layout. The engine was updated to a more powerful 2,954 cc (3.0 L) inline-six engine rated at 149 kW (200 hp; 203 PS). Although initially only available with naturally aspirated engines, a turbocharged version was added in the 1987 model year. The Supra was now mechanically related to the Soarer.

All Japanese market models with the various versions of the 2.0 L engine were slightly narrower overall so as to be in compliance with Japanese Government dimension regulations so that Japanese buyers weren't liable for yearly taxes for driving a larger car.