The most powerful vehicle in the E-Class lineup for 2005, the E500 was powered by a 5.0-liter V8 engine, which Mercedes borrowed from its S-Class vehicles. The V8 produced 302 horsepower, and was linked to an efficient seven-speed automatic transmission designed to help improve gas mileage as well as acceleration. The transmission was equipped with the Touch Shift feature, which enabled the driver to upshift and downshift manually by nudging the shift lever left or right.

The E500 was available in both a sedan and a wagon version for 2005. The wagon was equipped with the automaker's 4Matic all-wheel-drive system, which provided improved handling, stability, and traction in all types of driving conditions. In addition, the wagon came with third-row seating that folded down to provide additional cargo space.

In keeping with their status as the leaders in Mercedes-Benz' important mid-size luxury car category, the E500 sedan and wagon were well-equipped with both luxury features and high-tech mechanical systems, including a self-leveling system, anti-lock brakes, traction control, and an Electronic Stability Programming (ESP) anti-skid system. They also came with the automaker's TeleAid emergency communication and assistance program.

Other standard features included leather seats with power adjustment in the front, wood interior trim, a leather-trimmed steering wheel, multi-zone automatic climate control, dual front and side airbags, power windows, power exterior mirrors, cruise control, and an AM/FM audio system with a CD player.

A DVD-based navigation system was among the options. Other options included Dynamic Drive seats that adjusted automatically to support the driver under heavy cornering, a twin sunroof with power sunshades, and a smart cruise control system that automatically adjusted the vehicles' speed to maintain a set distance from the car it followed.

According to many drivers, the previous year's E500 vehicles had a number of mechanical problems, but those problems appeared to have been fixed for the 2005 model year. Drivers had mostly positive comments about the 2005 E500 sedan and wagon, citing the vehicles' smooth ride, quick acceleration, responsive handling, and numerous creature comforts as among their positive features.