Announced in its home market in May 1957 the XK150 bore a family resemblance to the XK120 and XK140 but was radically revised. Most visibly, a one-piece windscreen replaced the split screen, and the wing line carried higher and more streamlined at the doors. The widened bonnet opened down to the wings, and on the coupés the windscreen frame was moved forward 4 inches (102 mm) to make passenger access easier. The car was available at various times in Red, Pearl Grey, White, Indigo Blue, Claret, Cotswold Blue, Black, Mist Grey, Sherwood Green, Carmen Red, British Racing Green, Cornish Grey, and Imperial Maroon

The first closed and convertible XK150s were slower than their predecessors. After a twelve-month delay caused by the February 1957 factory fire, this deficit was corrected in the spring of 1958 with the March release of special equipment models fitted with disc brakes and more powerful SE engine. Twin 1.75-inch (44 mm) SU HD6 carburettors and a modified B type cylinder head with larger exhaust valves improved performance to 210 SAE bhp at 5500 rpm. While most export cars were SE models, a third option for the open two-seater featured an "S" engine with three 2-inch (51 mm) SU HD8 carburettors and a straight-port cylinder head boosting power to a claimed 250 SAE bhp.

In 1960 the 220 hp (164 kW; 223 PS) 3.8 litre engine fitted in the full-sized luxury Mark IX saloon since October 1958 became available. It was tuned to produce up to 265 hp (198 kW; 269 PS) in S models and propel an XK150 to 135 mph (217 km/h) and from 0–60 mph in around 7.0 seconds. Fuel economy was 18mpg. Four-wheel Dunlop 12 in (305 mm) disc brakes appeared for the first time as an option. Factory specification 6.00 × 16 inch Dunlop Road Speed tyres or optional 185VR16 Pirelli Cinturato CA67 radials could be fitted on either 16 × 5K½ solid wheels or optional 16 × 5K wire wheels.