The Volvo 850 introduced a front-wheel-drive platform with a transversely mounted 2.4L inline-five, offered in naturally aspirated and turbocharged forms producing up to 222 hp. It was paired with a 5-speed manual or 4-speed automatic transmission, while the chassis used independent suspension, four-wheel disc brakes, and Volvo's Delta-link rear suspension.

The performance versions, particularly the 850 Turbo and T-5R, added stronger turbocharged engines, revised suspension tuning, larger brakes, and sportier wheels and bodywork. The combination of five-cylinder turbo power, practical wagon packaging, and Volvo's BTCC racing connection gave the 850 a distinctive place among performance-oriented European wagons of the 1990s.