The basic structure of the 302 V8 engine was largely unchanged but there were a lot of upgrades beyond just electronic fuel injection. The V8 got a high-performance forged camshaft; roller lifters; forged aluminum pistons with low-tension rings; stainless steel tubular exhaust headers; and a good, old-fashioned, large-diameter, honest-to-goodness dual exhaust. Ford also upgraded the valves and installed a more efficient water pump that robbed less power during operation. Perhaps the only things holding it back were the truck-derived cylinder heads, which were chosen more for their efficiency than for outright power. But Ford raised the compression ratio to a respectable 9.2:1, which made up for the choice of heads.

Though the 1986 GT’s 200 horsepower was down 10hp from the last four-barrel-equipped Mustang GT sold in 1985, it was faster in terms of performance and was a more robust and fun engine thanks to the increase in torque to 285 lbs/ft across a broader rev range. The optional, shorter 3.08-geared rear end also helped with performance too. A proper five-speed manual, the Borg-Warner T-5, was standard kit on the GT, though an automatic with overdrive could be ordered as well. In 1986, the Mustang GT saw an updated drivetrain including a new 10.5″ (from 10″) clutch. The 7.5″ rear-end was eliminated in V8 models in favor of the stronger 8.8″ rear-end.

The GT also had unique, more aggressive styling than the base Mustang. The Marchal fog lamps were integrated into the front bumper. The 1986 Mustang GT had carryovers from 1985 such as a hood stripe with GT lettering, GT embossed in the bodyside molding, rear spoiler, 10 spoke alloy wheels. The GT hood lettering and rear spoiler could be deleted.