2004 Mitsubishi GLX (NP) 1.0

Designed in house, the third generation Pajero debuted in the Japanese domestic market in 1999, and in other markets in late 2000 as a 2001 model and in the Philippines and other developing nations in 2003.

The third generation was redesigned with a lower, wider stance and unibody (monocoque) construction with integral ladder frame chassis for increased torsional rigidity and drastically improved cabin strength when compared to typical body-on-frame (ladder frame) designs. This was in part due to Mitsubishi's RISE reinforcement system which resulted in a chassis and body combination that exhibited impressive structural integrity in rollover accidents and was completely unaffected by severe chassis loading as would typically experienced during off-road recoveries. The fuel tank was relocated between the front and rear axles to improve weight distribution and improve ground clearance. This generation was full-sized SUV, rather than mid-sized, and featured a fold and tumble, reclining second row 60/40 split seat and a stowable / removable third row seat.

The Super Select 4 (SS4) system was also further refined: bevel gears were replaced with planetary gears. This meant the front-to-rear torque setting ranged from 33 to 67, with the ability to adjust to 50/50 depending on surface conditions. The system was also made fully electronic, meaning the vehicle didn't have to be in gear to switch between drive modes. After all the upgrades, the system was renamed to Super Select 4WD II (SS4-II).

Alongside rack and pinion steering (as opposed to the recirculating ball system on previous generations), the Pajero also offered a choice of three transmissions; a five speed manual, a four speed INVECS-II automatic and a five speed INVECS-II tiptronic.

An all new 3.8 litre SOHC 24-valve V6 powerplant was also introduced on this generation. This engine utilized an Electronic Throttle Valve (ETV), to deliver a refined cruising power with power to spare for off-road ventures.

The third generation was introduced on 2 August 1999 and was scheduled to be replaced by the Autumn of 2006. It received a minor face lift in 2003. The 3.0 L engine's power was increased to 130 kW (180 PS; 170 hp), and the 3.5 L engine was given petrol direct injection, increasing power to 162 kW (220 PS; 217 hp) in the Japanese market (export versions kept the standard EFI engine, now with 149 kW (203 PS; 200 hp). The 2.8 L Diesel was retained only for developing markets, and was replaced by a new 16-valve direct injection engine, with 3.2 L and 120 kW (160 PS; 160 hp).

In the North American market, the 3.5 L engine was replaced for 2003 by a more powerful 3.8 L unit, with 160 kW (220 PS; 210 hp). This engine was later made available to export markets such as South America, Australia and New Zealand, whilst it replaced the GDI V6 in the Japanese lineup in 2005. The short wheelbase model is not available in North America, where the Montero was the only SUV in Mitsubishi's lineup with standard four-wheel drive as opposed to all-wheel-drive. The Montero left the US market after the 2006 model year.