Launched in September 1998, the redesigned WJ 1999 Grand Cherokee shared just 127 parts with its predecessor (mostly fasteners). The European model was coded WG. The spare tire was relocated from the side of the cargo compartment to under the floor. (Like the 1998MY ZJ, the rear tailgate glass opened separately.) The two heavy pushrod V8 engines were replaced by Chrysler's then-new PowerTech. The new V8 engine produced less torque than the old pushrods, but was lighter, offered better fuel economy, and provided similar on-road performance figures (the 23-gallon fuel tank was replaced with one of a 20.5-gallon capacity). The straight-six engine was also updated. A redesign of the intake manifold added 10 horsepower (7.5 kW). While other Jeep vehicles used the Mopar 5 × 4.5 bolt circle, this was the first Jeep following the 1987 Chrysler buyout to receive a wider bolt pattern—5 × 5.

A notable feature available in this generation was the automatic four-wheel drive option called Quadra-Drive, which employed the New Venture Gear NV247 transfer case. This two-speed chain-driven transfer case uses a gerotor, a clutch pack coupled to a hydraulic pump, to transfer torque between the front and rear axles. The transfer case contains three modes, 4-All Time, Neutral, and 4-Lo. In 4-All Time, 100% of torque is sent to the rear axle in normal conditions. If the rear axle starts spinning at a higher rate than the front axle, hydraulic pressure builds up in the gerotor and causes the clutch pack to progressively transfer torque to the front axle until both axles return to the same speed. A neutral mode is intended for towing the vehicle. In 4-Lo, the front and rear axles are locked together through a 2.72 reduction gear ratio. The NV247 transfer case is mated to front and rear axles containing Jeep's Vari-Lok differentials. Vari-Lok differentials also use a gerotor to transfer torque between the wheels on either side of the axle. The major advantage of Quadra-Drive was that the combined transfer case and progressive locking differentials in each axle could automatically control traction between all four wheels. However, only the center differential could be permanently locked, and only in 4Lo. The Quadra-Trac II system included the NV247 transfer case with the standard open front and rear differentials.

The 45RFE and 545RFE automatic transmission in the WJ was notable. It included three planetary gear sets rather than the two normally used in a four-speed automatic. This gave it six theoretical speeds, and it would have been the first six-speed transmission ever produced in volume, but it was programmed to only use five of these ratios. Four were used for upshifts, with a different second gear for downshifts. Although five of the six ratios were used, Chrysler decided to call it a "4-speed automatic". For MY 2001, the programming was changed to make use of all six ratios. Rather than have six forward gears, the transmission was programmed to act as a five-speed with the alternate second gear for downshifts. The rpm at 70 miles per hour (110 km/h) on a 545RFE is 2,000 rpm, 200 rpm less than the 45RFE programming. 1999 and 2000 model-year WJ owners can have their 45RFE transmission's programming flashed to enable the extra gear as both transmissions are physically the same. (Must purchase new PCM and ABS module and program them with a fake VIN to make this work.) The 42RE 4-speed automatic remained the transmission for the inline 6 engine. It had slight changes from the previous model Grand Cherokee.


The interior was also completely redesigned. The redesign allowed for larger rear doors, and more space for rear passengers. Controls for various items like headlights, heated seats, and rear wiper were moved to more convenient locations. The electronic Vehicle Information center was moved from below the radio to above the windshield and was standard on 2000–2004 models. Limited models included automatic dual-zone climate control. A 10-CD changer was also available with the Infinity Audio package.


The Grand Cherokee received a minor facelift for 2004 including round fog lamps, a lower front fascia, and a new body color-matched inset grille design.

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