The Ford Mustang began to "grow up" in 1967 in more ways than one. The length and height was respectively increased to 2.7" and 0.5" and received a wider track, even more diverse range of engines available, and a new list of options. There also was an immense redesign that set the Ford Mustang aside from all others. Now, the car contained bulkier sheet metal below the beltline. The grille was modified, once again, to give the car a more aggressive look. It received a longer nose with a bigger grille. This Mustang was made for a muscle car look with an aggressive stance. The tail panel was changed to look more concave, instead of modest and convex, as well as the separating of the tail light into three tail lights. The 1967 Mustang was redesigned with a dramatic change that influenced many Mustangs to come. The regular model was changed from a semi-notchback to a completely full fastback roofline. The roofline on the new fastback Mustangs extended all the way to the rear of the trunk and the convertible Mustang's rear window was made of real glass instead of the hazing plastic previously used.

The increased size in the Mustang resulted in a wider body, which allowed for the first big block engine in the Mustang. Ford had expanded the engine compartment to be able to drop in a big block 390. The addition of this engine was for Ford to be able to compete against the new Chevrolet Camaro SS396, which was the competition that it had not had before. This also included Pontiac's Firebird and Plymouth's new redesigned Barracuda. Also, within Ford itself, Mercury was selling the Cougar.

The popularity of the new 390 engine ended the reign of the high performance 289 cubic inch engine, which was later cut from the line of production. The eye of the Mustang enthusiast was caught by the availability of yet another Shelby modified Mustang, which was always the top of the line. The previous Mustang GT350's power was a modified 289 V8, and the output declined to 290 horse power. The new GT350 contained a reworked 428 V8. Some of these have been said to be built with a race ready 427 V8, which was more powerful than the other. The '67 Shelby Mustangs had more luxury options, which appealed to the buyers in more ways than one. The '67 Shelby GT was the last Shelby Mustang built by Shelby-American. Ford built the latter GT cars without Carroll Shelby's contribution.

Other new options available with the 1967 Mustang included the tilt away steering wheel, an overhead console, a built in heater and air conditioning, a Stereo Sonic tape system, AM/FM radio, and bench seats. The side scallops were made deeper, and a hood with dual recesses was an available option. Power disc brakes and a completely new transmission were also installed. The transmission, the FMX, allowed fully automatic or manual shifting. The options for the interior's trim were reduced to 20 in 1967 unlike the many 34 options in 1966. The total production in 1967 came slightly above 472,000 units.

Overall, the 1967 Mustang was a more stable car than the 1966. The seats were made more comfortable as well as an instrument pod that was easier to comprehend and read. All these improvements made the '67 a better car in more ways than one. Regardless of the new competition that surrounded the Mustang, Ford sold 356, 271 coupes, 71, 042 2+2 fastbacks, and 44, 808 convertibles.