Launched in October 2000, the Mondeo Mk III was considerably larger than its predecessor, but is still based on the Mk I's floorpan and running gear. Although Ford abandoned its New Edge design theme for the Mondeo Mk III, it still borrowed some styling cues from the Focus Mk I, giving it an overall effect which many critics felt was more restrained and mature than the Focus if much less distinctive. Two of the old car's biggest weaknesses, the modest rear legroom and uncompetitive diesel version were addressed by a longer wheelbase and the new "Duratorq" diesel engine.

For the Mk III, the 1.6 L Zetec engine was dropped while the 1.8 and 2.0 L engines were heavily revised and were renamed Duratec. The standard 2.5 L V6 engine was carried over, while a 3.0 L version was developed for the ST220 model.