The 1987 Mustang received a facelift for both the interior and exterior. The exterior design was reminiscent of the earlier SVO and gave the car more of an "Aero" look, in keeping with Ford's overall styling direction. The interior received an all new dash, center console and revised seat and door trim. With the end of the 1986 SVO, the models were now pared down to LX and GT. Taillights on the LX were revised with clear lenses for the turn signals while the GT now wore a specific body-colored triple sectioned louvered treatment. The rear quarter glass windows lost their louvers and now sported a single larger flush piece of glass lettered with "Mustang" at the bottom rear corners. GTs featured new round fog lamps and gained aerodynamic lower bodyside skirting and new turbine style 15-inch (380 mm) wheels. The 302 cu in (4.9 L) engine option was added to the LX model line for both hatchback and notchback models. The previous year's slotted GT wheels became standard with the V8 option and optional with 4-cylinder models. The 302 cu in (4.9 L), marketed as "5.0", Mustangs became popular with the aftermarket performance industry. The V6 option was discontinued while the 2.3 L four-cylinder gained fuel injection, leaving only the 2.3 L four-cylinder and the 302 cu in (4.9 L) V8.
Also for 1987, V8-powered Mustangs received E7TE heads and forged aluminum pistons with valve reliefs, as opposed to the flat-tops used in the previous year. The E7 cylinder heads were sourced from the truck line after the 1986 swirl-port design demonstrated performance problems. Power ratings increased to 225 hp (168 kW) and 300 ft·lbf (410 N·m) of torque. No major changes were seen for 1988, although the T-top roof option for hatchbacks was discontinued midyear. For 1989, the Mustang's speed density computer system was replaced with a mass air system (1988 Mustangs sold in California also had the MAF system). This change slightly reduced factory horsepower, but it made Mustangs much easier to modify. With the mass air system, changes made to the intake, engine, and exhaust system would be recognized and compensated for by the ECU, resulting in a correct air/fuel ratio and optimum power. A driver's-side airbag became standard starting in 1989 for 1990 models. Ford's only gesture at a 25th Anniversary Mustang was small, a passenger-side dashboard emblem with galloping-horse logo affixed to all models built between 27 March 1989, and the end of model-year 1990.
In 1989, Ford resources began to focus on the next Mustang, due to debut in late 1993. There would be few changes in the model line through its retirement in 1993. Most changes would be visual. For 1990, a limited run of 4,103 emerald green exterior, and white leather interior LX 5.0 convertibles, and a limited run of 5,897 silver exterior, and grey interior GT hatchbacks were produced for a contest held by 7-Up, but the contest was cancelled at the last second. Similarly, for 1992 and 1993, three special-edition LX 5.0 convertibles were released in the spring. These models had with Vibrant Red exteriors with Oxford white leather interiors for 1992, Vibrant Yellow exterior with black or white leather interior, or Vibrant white exterior with white leather interior, for 1993.
The 1991 model year changes to the 2.3 L I4 engines included an increase in horsepower (from 88 to 105) due to a revised cylinder head with two spark plugs per cylinder.
With the end of the run near in 1992, Ford switched to cast hypereutectic pistons for all 302 cu in (4.9 L) engines and also re-rated the GT to 205 hp (153 kW) and 275 ft·lbf (373 N·m) of torque. This estimate was more accurate given the previous power ratings were made before the addition of the mass air flow system, minor revisions in the camshaft profile, and other various small changes made throughout the production run.
Under the newly established Ford SVT division, the 1993 Ford Mustang SVT Cobra was offered with the 302 cu in (4.9 L) V8 that produced 235 hp (175 kW) and 280 ft·lbf (380 N·m) of torque. Featuring more subdued styling than the GT, the Cobra used Ford's new GT-40 high-performance engine equipment. A Cobra R model was also produced for 1993 that used the same engine as the regular Cobra. It featured larger brakes, Koni shocks and struts, engine oil cooler, power steering cooler, and rear seat delete. Options such as air conditioning and a stereo system were not available on the Cobra R.
Production of the third generation Mustang concluded in September 1993. The 1993 Mustang was the first for a CD player to be optional from the factory.
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