The 2007 XC90 gets freshened styling, new side mirrors with integral turn signals, an interior with more bright work, and "watch dial" instruments for the XC90 V-8. A new base model—the XC90 3.2—replaces last year's XC90 T5. The 3.2 gets a normally aspirated 6-cylinder engine with a 6-speed automatic in place of the T5's turbo 5-cylinder and 5-speed automatic. Also, option packages have been revised, and rain-sensing wipers are now available.

As a manufacturer known for its boxy but practical station wagons, it came as no surprise when Volvo announced its plans to "go big" and join the sport utility vehicle (SUV) market in 2004; the resulting XC90 offered standard all-wheel drive (AWD) and seating for 5, with an optional third row to expand that to 7. The XC90 debuted with 5- and 6-cylinder engines, both turbocharged; a 4.4-liter V-8 joined the fray in 2005.