The XJR, introduced in 1988, was a high-performance model that was finished by the Oxfordshire-based JaguarSport company, a dual venture by Jaguar and race team TWR, at TWRs Kidlington-based factory alongside the XJ220. Based upon a Sovereign model, it was fitted with uprated suspension with unique Bilstein dampers, a revised power steering valve to increase the steering weight by 40% and special exterior paint and exterior styling touches. Early examples were fitted with a 3.6 L AJ6 engine in standard tune but later models had a TWR tuned version of the 4.0 AJ6, with new inlet manifolds, uprated cams and a tweaked ECU. Some examples are also fitted with a larger bore JaguarSport exhaust system.

The XJR differed cosmetically from other XJ40 models with its body coloured bodykit, consisting of new front and rear valances and side skirts, all from fiberglass, a black grill with a JaguarSport badge in it and unique Speedline alloy wheels with wider tyres. Later models had ducting fitted to the front valance to feed cool air directly to the brake discs. The interior featured a leather MOMO steering wheel, JaguarSport logos on the dial faces, leather shift knob, and seat headrests embossed with the JaguarSport logo.

The XJR model was introduced in 1988 and ceased production in 1994. In 1991 the appearance of the XJR changed when it switched to the square headlights of the Sovereign model and was fitted with a different design of bodykit. Only a few hundred of each variation were produced, making the cars rare today.

Currently in the workshop in prep for sale.