With the introduction of Camaro and Firebird and Ford's own Cougar, the advantage that Mustang had in being first had pretty much evaporated. So in 1967 Ford presented the first re-design of the Mustang since its inception. Although the wheelbase remained the same at 108 inches, the 1967 Mustang was 2 inches longer and 2.7 inches wider, now at 70.9 inches. The front and rear wheel tread width increased by 2.1 inches improving handing.

The grille was enlarged and simulated air scoops on the side of the car were also increased in size. Three tail lights on each side of the car now were placed in a concave back panel.

And in an effort to keep ahead of any newcomers, Mustang also offered an optional big-block 390 cid V8 rated at 320 horsepower.