Unlike its predecessors, the E39 M5 was not handbuilt at the BMW M GmbH factory; it was produced on the same assembly line as the normal E39 5-series at the Dingolfing factory in Germany.
Introduced in 1998 at the Geneva Motor Show, production did not begin until late October of that year. A total of 20,482 E39 M5s were made from 1998 to 2003. BMW M produced three versions of the E39 M5, the European LHD and RHD versions and the North American specification version.
The BMW M5-E39 had a highly tuned V8 engine based on the M62 engine called the S62, which displaced 4.9 L and produced 400 bhp (294 kW). The engine featured a 7000 RPM redline, Double-VANOS, which varies the intake and exhaust valves for both cylinder banks, and individual throttle butterflies for each of the cylinders, allowing for a much faster engine response time.
All E39 M5s were equipped with a Getrag Type D six-speed manual transmission with the following gearing ratios:
4.23(1), 2.54(2), 1.62(3), 1.23(4), 1.00(5), 0.83(6)
It is the same transmission used in the E39 540i but some changes were made to cope with the extra power the S62 engine produced. A reinforced clutch, rear differential utilizing a shorter 3.15:1 ratio and a limited slip differential with 25% maximum locking.
The E39 M5 suspension shared its basic aluminium-intensive MacPherson strut/multi-link design of the V8 E39 5 series. However, several changes were made by BMW M. Reduced spring height, 0.9 inch (23 mm) lower. A specific shock valving, thicker front and rear anti-roll bars, polyurethane auxilliary springs and steel balljoints.
Like all V8-powered E39 models, the E39 M5 was equipped with a recirculating-ball steering system. Overall steering ratio was reduced to 14.7 from 17.9 it featured a servotronic vehicle-speed-sensitive power assist that provides two levels of resistance controlled via console mounted Sport button. The E39 M5 is equipped with four-wheel vented disc brakes measuring 13.6" in diameter in front and 12.9" in diameter in the rear.