The third generation Toyota Prius debuted as a compact liftback manufactured and marketed by Toyota, having launched in 2009 for model year 2010 at the January 2009 North American International Auto Show. Internally designated as model XW30 and replacing the XW20 series, sales began in Japan on May 18, 2009.

Noted for its more aerodynamic bodywork and a claimed drag coefficient of Cd=0.25, an underbody rear fin helps stabilize the vehicle at higher speeds. The third generation is also noted as the first production engine without efficiency-robbing accessory drive belts.

Since its launch in 2009, global production reached approximately 1,688,000.

The powertrain concept largely carried over from the previous XW20 generation, with engine displacement increasing to 1.8 litres and the transaxle changing to the THS III. Disc brakes replaced the North American model's rear drum brakes.

For the Prius, Toyota used a range of plant-derived ecological bioplastics using wood- or grass-derived cellulose. The two principal crops are kenaf (a member of the hibiscus family and related to cotton and okra) and ramie, commonly known as China grass and one of the strongest natural fibres, similar to flax in absorbency and density. The use of plant-based eco-plastics coincided the United Nations' 2009 International Year of Natural Fibres.

In August 2010, Toyota began sales of an onboard sound device to mimic the sound of an electric motor when the Prius is operating in its most quiet mode, as an electric vehicle at speeds up to approximately 25 kilometres per hour (16 mph). The device became available in Japan for retrofitting on the third-generation Prius at a price of ¥12,600 (~US$150) including the consumption tax. The alert rises and falls in pitch according to the vehicle's speed, to convey the vehicle's proximity and movement to nearby pedestrians. The device met the Ministry of Land, Infrastructure, Transport and Tourism's guidelines issued in January 2010 for hybrid and other near-silent vehicles.

Toyota said it filed 1,000 patents during the development of the XW30 Prius.

The 1.8-liter four-cylinder gasoline engine (previously 1.5 liters) generates 73 kW; 99 PS (98 hp), and with the added power of the electric motor 20 kW; 27 PS (27 hp), total horsepower is 100 kW (134 hp) (previously 110 hp). The larger engine displacement allows for increased torque, reducing engine speeds (rpm), which increases fuel economy at highway speeds. With an electric water pump, the Prius engine is the first production engine that requires no accessory belts, which also further improves fuel economy. The electric motors and other components of the hybrid powertrain are also smaller and more efficient. Toyota estimates the new inverter, motor and transaxle are 20 percent lighter. It has a 1.3 kWh nickel-metal hydride (NiMH) battery.