The C5 was a major change from the previous generation. Designed from the outset as a sturdy convertible (as opposed to a coupé that was subsequently weakened by the removal of the roof structure in order to accommodate demand for a convertible model), the car now had a hydro formed box frame. The transmission was moved to the rear of the car to form an integrated, rear-mounted transaxle assembly which was connected to the all-new LS1 engine via a torque tube; this engine/transmission arrangement helped facilitate a desirable 50-50 (percentage, front-rear) weight distribution for the vehicle. The LS1 engine initially produced 345 hp (257 kW), but that was increased slightly in 2001 to 350 hp (261 kW). The 4L60-E automatic transmission carried on from previous models, but the manual was replaced by a Borg-Warner T-56 6-speed. Gone were the squeaks and rattles of the C4,[1] replaced by a stronger frame that would last for at least two more generations. By all measures, the new C5 was better in every aspect than the C4 it replaced.

A successor to the ZR-1 made its debut in 2001 as the Z06, giving a nod to the high-performance Z06 version of the C2 Corvette of the 1960s. Instead of a heavy, double-overhead cam engine like the ZR-1, the Z06 used a high-output, tuned version of the standard LS1 Corvette engine (designated LS6), which initially produced 385 hp (287 kW). Although its total horsepower output was less than that of the last ZR-1, the Z06 was much lighter, and could out-perform the ZR-1 in every category except top speed. It also cost substantially less money than the ZR-1.