The car was introduced in Japan in 1966 and crossed the Pacific two years later. Since then, more than 30 million have been sold in 142 countries.
The new model, shown at the Specialty Equipment Market Association trade show Oct. 31, was designed to be sportier, with a larger interior, wider chassis and a more economical and powerful 1.8-liter engine, the company said.
The car is expected to get 27 miles per gallon in the city and 35 mpg on the highway under new Environmental Protection Agency standards, Toyota said. It puts out 132 horsepower, six more than the current model.
Tougher standards make it appear to be less fuel efficient than the 2008 model, which is estimated at 28/37 mpg with a manual transmission, but the reverse is true, the company said.
"It's putting out more power and has better fuel economy than it's predecessor," said Mike Michels, a spokesman for Toyota Motor Sales USA Inc. "But if you look at the outgoing Corolla, those numbers will look higher. It's because the EPA changed the rating method."
The decked-out XRS model comes with front and rear spoilers and a 2.4-liter engine capable of producing 158 horsepower, with estimated mileage of 22/30 mpg. The engine is almost identical to that in the current Camry, a larger sedan.
"The acceleration is better than Camry," chief engineer Shinichi Yasui said, explaining that the XRS Corolla can go from zero to 60 mph in 8.1 seconds. "This acceleration is top of class for a small car."
The company also is aiming at tech-savvy, urban buyers by offering the Corolla for the first time with the option of touch-screen navigation and real-time traffic capabilities.
Toyota also revealed the second generation of the Matrix, the hatchback version of the Corolla.
It features a lower, sportier profile, with a curvier backside and a windshield more in line with the hood, making it look more like a small crossover utility vehicle.
"The current model ... looks like a wagon," Matrix chief engineer David Terai said. "There are some people who don't like that. We wanted to get more younger buyers."
The new Corolla and Matrix are expected to reach dealerships in February, with pricing between the entry-level Yaris and the top-selling Camry sedan.
The company reportedly delayed introduction of the new model so it could redesign it after seeing the new Honda Civic. It expects to sell 300,000 Corollas and 60,000 Matrixes in the U.S.