Second generation (2001–2005)

The second generation RAV4 went on sale in the middle of 2000, and came in base Edge and upmarket Cruiser models (model designations may vary according to market), in both 3- and 5-door configurations. The main differentiation between the two models was in appearance. Edge models came with unpainted grey bumpers and side cladding, mirrors, and door handles, and featured steel rims. Cruiser models gained body-coloured (painted) bumpers and moldings, mirrors, and door handles, alloy wheels, and ABS brakes. All models came equipped with a brand-new 2.0 litre 4-cylinder engine featuring VVT (variable valve timing), resulting in improved power and torque, as well as fuel consumption. Permanent all-wheel-drive was a feature. Options were ABS brakes (on the Edge), and air conditioning (on all models).

The second generation RAV4 was originally offered in a number of trim levels: NV was 2-wheel drive, while NRG, GX, and VX were permanent 4-wheel drive with differing levels of equipment. It continued on the Corolla platform. Although the RAV4 was available as a two-door in Europe, Asia and Australia, the American model was now only available in a four-door configuration. A 2.0 L I4 engine producing 148 hp (110 kW) and a D4-D diesel engine were available. Some RAV4s came with anti-lock braking system, electronic stability control, air conditioning, a height-adjustable driver's seat, cruise control, a six-speaker CD stereo and power windows, mirrors and seats. A sport package added a mesh grille, hood scoop, color-keyed door handles, a roof rack, silver sport pedals, heated mirrors, gray-painted bumpers and fender flares, and sport fabric seats. Other options included alloy wheels, heated seats, a sunroof and keyless entry. 16-inch wheels were standard; larger tires were available on all wheel drive models.

In late 2003, the RAV4 was given a styling update, improved equipment, and, in certain markets, a new engine. The RAV4's 2.0 litre engine was upgraded with a new 2.4 litre VVT engine, producing 9% more power (120 kW) and 17% more torque. Fuel economy improved by over 2%. The base Edge was renamed CV, and gained standard air conditioning (previously an option). The CV also received painted bumpers, which came in either silver or body-coloured shades, depending on the body colour. In addition, the model range was given a subtle facelift, largely comprising of a new front bumper with circular fog lights.

The second generation RAV4 enjoyed enormous success in Australia, where it became the best-selling SUV in the country in 2001, overtaking it's rival, the Honda CR -V, for the first time.

Notably, the second-generation RAV4 had the highest proportion of female drivers among all makes and models in the United States with the possible exception of the Volkswagen New Beetle, according to 2003-04 registration and survey data.