1994 marked the much-anticipated debut of Ford's fourth major Mustang redesign. The new pony car had plenty of power and more panache than ever, with styling cues picked up from 1964. The grille pony returned in 1994 after a 16-year absence. Designers said it was one of the best decisions they'd ever made.

Like its first-generation cousin, the 1994 Cobra convertible was selected as the pace car for the Indy 500. All 1994 Cobra convertibles were Indy 500 Pace Car editions. Just over 5000 other 1994 Cobra coupes were produced, and were available in only red, white, or black. The spoiler on Cobras were different than on other models, and included a built-in LED stop lamp.

The Mustang convertible, like all 1994 models, was well received by Mustang fans and sold well. The 1994 production Mustang sold a total of 123,198 vehicles, almost 10,000 units more than the previous year. Convertibles sales were a healthy 53,714.