The all-new Windstar was released in March 1994, for the 1995 model year. While smaller than its predecessor, its sleek design, front-wheel drive, and better car-like handling made it more competitive with similar offerings from Chrysler and GM. The Windstar had beaten the third-generation Dodge Caravan to the market by over a year, which played a crucial role in Ford taking significant market share in the minivan market.
Though its size was between the smaller front-wheel drive Mercury Villager and the larger rear-wheel drive Ford Aerostar, for its first year, it was priced above both of them. By 1997, however, the Villager's base price had surpassed the Windstar's by several hundred dollars, and top-of-the-line Villager Nautica models went for some $6,000 USD more.
Among standard features were anti-lock brakes, dual airbags, seven-passenger seating, and a 3.8L V6 engine, borrowed from the Taurus/Sable. This engine produced 155hp (116kW), but produced 220lb·ft (298N·m) of torque. For its inaugural year, the Windstar was available in base GL and high-end LX trim, as well as a cargo version called Cargo Van.
- 1996: A new 3.0L 150hp (112kW) Vulcan V6 became standard on base GL models, while the larger 3.8L V6's horsepower was upped to 200. The driver's seat gained an available tilt/slide feature for access to the rear from the driver's side.
- 1997: A bare-bones unnamed base model was now available. A CD player became a new option on models.
- 1998: The Windstar received minor cosmetic changes including a new grille and headlights; in compensate for the lack of a driver's side rear sliding door, the driver's door was extended six inches (152 mm) , as it was not possible to create a driver's side sliding door with the current bodyshell. An ultra-luxury Limited model was new. It included leather seating and faux wood interior trim.
- Cargo Van • 1995–1998
- base • 1996–1998
- GL • 1995–1998
- LX • 1995–1998
- 3.0L • 1998
- Limited • 1998