The Eclipse underwent a change into its third generation in 1999, closely applying the Mitsubishi SST design study which debuted at the 1998 North American International Auto Show. It was the first concept vehicle exhibited by Mitsubishi at an auto show in the U.S.
Two new powertrain options were available, a 147 hp 2.4 L 16-valve SOHC 4-cylinder 4G64 and a 205 hp 24v SOHC 3.0 L V6 (6G72). AWD was no longer an option. The suspension setup was adjusted to provide a softer and more compliant ride quality.
The third generation Eclipse shared its powertrain with the 8th generation Galant. In late 2001, power of the GT trim was lowered to 200 hp (150 kW) as a result of tightened emission standards forcing MMNA to adopt the California emissions standards for all variants of the car, rather than selling independent 'Fed Spec' and 'Cali Spec' versions.
In mid-2002, the GTS trim was introduced for the 2003 model year. This vehicle included an engine with a 10:1 compression ratio, revised camshaft profile and an improved Mitsubishi Variable Induction Management (MVIM) air intake system that gave the car an extra 10 hp (7.5 kW) and a slightly improved power curve. The 2003–2005 GTS coupe, GTS Spyder and GT Spyder shared the new engine while the GT coupe retained the 200 hp (150 kW) powertrain.