In 1986, General Motors acquired the Lotus Group, an automotive manufacturing and engineering consultancy based in Great Britain. The Corvette division approached Lotus with the idea of developing the world's fastest production car based on the C4 generation Corvette. With input from GM, Lotus is designing a new engine to replace the standard L98 V8 C4. The result was what GM called the LT5, an aluminum block V8 with the same bore centers as the L98, but with four overhead cams and 32 valves. Lotus also designed a unique air management system for the engine, providing a wider power range by cutting 8 of the 16 intake manifolds and fuel injectors when the engine was at part throttle, while the ZR-1 still delivered 375 hp (280 kW ) at wide open throttle . In addition to the engine, Lotus helped GM design the ZR-1 (dubbed the “King of the Hill” in the prototype version) with improved steering and braking systems and the choice of configuration from the standard “FX3.” damping control for the car that helped ensure the vehicle was more than just a muscle car with a big engine and no real track performance.
GM revealed that the engine required special assembly and that neither the Corvette plant in Bowling Green, Kentucky, nor any of its regular manufacturing facilities could handle the workload, so they hired Mercury Marine Corporation of Stillwater, Oklahoma, to assemble the engines and ship them in the Corvette. factory in Bowling Green, where the ZR-1 was assembled.
The vehicle went on sale in 1990 and was only available as a coupe. It was distinguished from other Corvette coupes by a wider tail section, 11-inch (27.9 cm) rear wheels, and new convex taillights with four square taillights and a center high-mounted stop light (CHMSL). the top of the door glass, instead of between the rear lights.
In early March 1990, the ZR-1 set a new 24-hour land speed record of 5,000 miles by exceeding 175 mph (282 km/h).  Despite the all-new chassis, sleeker contemporary styling and other improvements to the model, prices rose and sales declined. The last C4 was produced on June 20, 1996.