For 1967, Mustang underwent its first major restyling. Design changes included making the Mustang both longer and wider, the grille became wider and taller, rear tail lamp panel was recessed, the sculptured sides were flared and more prominent and the simulated air scoop became two scoops. The fastback styling no longer ended at the trunk lid, but continued seamlessly to the rear edge of the trunk lid. Convertibles had the option of a glass rear curtain over the standard vinyl curtain.

The instrument cluster again offered five gauges. Three small gauges (fuel, optional clock and temperature) were placed above two larger gauges that straddled the steering column (speedometer and combo oil pressure/ammeter). If the optional tachometer was selected, it took the place of the oil pressure/ammeter gauges, which were now warning lights on the face of the tachometer. Popular interior options included a tilt-away steering wheel and the luxury Interior Décor group, featuring a roof-mounted console and brushed aluminum trim on the door panels, dash and center console.

1967 marked the first year Mustang was offered with a big block engine, the 390ci eight-cylinder. The three 289ci eight-cylinder engines and the 200ci six-cylinder were also offered this year.

The GT equipment group was again available in 1967 with similar offerings as previous years, with one notable exception – this was the only year that GT optioned cars with automatic transmissions were given the GT/A designation.

The new Shelby G.T. 500 was introduced this year. This new model featured a powerful 428 stuffed into the engine compartment. Other modifications to the Shelby G.T. models included a fiberglass nose, Cougar sequential tail lamps and fiberglass trunk lid, quarter panel extensions and a rear spoiler.