The XJ220 was developed from a V12-engined 4-wheel drive concept car designed by an informal group of Jaguar employees working in their spare time. The group wished to create a modern version of the successful Jaguar 24 Hours of Le Mans racing cars of the 1950s and '60s that could be entered into FIA Group B competitions. The XJ220 made use of engineering work undertaken for Jaguar's then current racing car family.

The initial XJ220 concept car was unveiled to the public at the 1988 British International Motor Show, held in Birmingham. Its positive reception prompted Jaguar to put the car into production; some 1500 deposits of £50,000 each were taken, and deliveries were planned for 1992