The Volkswagen Rabbit lineup was expanded again in 1983 with the addition of the sporty Rabbit GTI, which already had been on sale in Europe for several years. The soul of the GTI was its 1.8-liter, fuel-injected four-cylinder engine, which was rated at 90 horsepower. It came with a more aggressive five-speed transmission, a more tightly tuned suspension, Recaro sports seats, 14-inch wheels, and a revamped instrument panel. Reviewers and drivers alike praised the car for its power and handling, and it even landed on a 10 Best list.

The standard powerplant for the Rabbit was a four-cylinder, 1.7-liter single-overhead-cam gas engine that generated 74 horsepower. A 52-horsepower, 1.6-liter diesel engine was also available as an option.

The Rabbit came in both two-door and four-door hatchback versions. A Rabbit pickup and a Rabbit convertible were also available. MacPherson struts, large disc brakes, rack and pinion steering, four-wheel independent suspension, and energy-absorbing bumpers were all standard equipment. Other standard features and options included an AM/FM radio, color-coordinated interiors, reclining front seats, a rear window defogger, a wood-grained dash, and air conditioning.

The Rabbit, and particularly the GTI, received praise from drivers and reviwers alike for its handling, agility, and quickness. Drivers also noted the vehicle's comfort, fuel efficiency, and reliability.