In 2003, Jaguar introduced the re-engineered and newly designed third generation of the XJ, continuing with the XJ8 model designation. Designated internally as the X350, it featured an all-aluminium body and chassis, a new V8 engine, as well as greater interior and luggage spaces. It was the first Jaguar XJ to be completely designed under Ford ownership and used electronics and computer-controlled systems sourced through existing partner suppliers or directly produced by Ford.[citation needed]Just under 85,000 were manufactured over its seven year production run.

The V8 engine was offered in larger 3.5 and 4.2-litre displacements as well in a supercharged variation. A 3.0-litre V6 engine was also offered; neither the V6 petrol nor diesel engines were available in US markets. A new six-speed automatic gearbox was fitted which was lighter and offered better economy with lock-up on all gears and a larger spread of ratios.