The Toyota Camry was once again completely redesigned for 1997, with some big changes for the model as a whole. The body was redesigned to be larger, with a more angular profile and was available in new colors. The interior was redesigned as well, offering longer seats, a new dash and many small new convenience features, such as extra cubbies and larger cup holders. Most notably, Toyota dropped the wagon and the coupe for the 1997 Camry, leaving only the sedan. Toyota also shuffled the trim levels, renaming the base DX the CE and keeping the midlevel LE and luxury XLE. The sporty SE went the way of the coupe and the wagon.

The 1997 Toyota Camry got a bigger engine, with the four-cylinder producing 133 horsepower and the V6 194 horsepower. Toyota also increased the list of available safety features, making ABS standard in all models except the four-cylinder CE. Toyota also improved the bumpers in the 1997 Camry. Fuel economy is about 20 to 30 mpg, depending on the engine.

In 1997, the Toyota Camry became the best selling car that year, beginning a streak of topping the list that continues today. Once again, major complaints about the 1997 Toyota Camry include a lack of power, especially with the four-cylinder engine, and a bland, conservative look. However, the Camry's sales records show that buyers were enthusiastic about the car anyway.