The biggest change to the Land Rover came in late 1990, when it became the Land Rover Defender, instead of the Land Rover Ninety or One Ten. This was because in 1989 the company had introduced the Discovery model, requiring the original Land Rover to acquire a name. The Discovery also had a new turbodiesel engine. This was also loosely based on the existing 2.5 litre turbo unit, and was built on the same production line, but had a modern alloy cylinder head, improved turbocharging, intercooling and direct injection. It retained the block, crankshaft, main bearings, cambelt system, and other ancillaries as the Diesel Turbo. The breather system included an oil separator filter to remove oil from the air in the system, thus finally solving the Diesel Turbo's main weakness of re-breathing its own sump oil. The 200Tdi as the new engine was called produced 111 hp (83 kW) and 195 lb·ft (264 N·m) of torque, which was nearly a 25% improvement on the engine it replaced (although as installed in the Defender the engine was de-tuned slightly from its original Discovery 111 hp (83 kW) specification due to changes associated with the exhaust).
This engine finally allowed the Defender to cruise comfortably at high speeds, as well as tow heavy loads speedily on hills while still being economical. In theory it only replaced the older Diesel Turbo engine in the range, with the other 4-cylinder engines (and the V8 petrol engine) still being available. However, the Tdi's combination of performance and economy meant that it took the vast majority of sales. Exceptions were the British Army and some commercial operators, who continued to buy vehicles with the 2.5 litre naturally aspirated diesel engine (in the Army's case, this was because the Tdi was unable to be fitted with a 24 volt generator). Small numbers of V8-engined Defenders were sold to users in countries with low fuel costs or who required as much power as possible (such as in Defenders used as fire engines or ambulances).
Along with the 200Tdi engine, the 127's name was changed to the Land Rover Defender 130. The wheelbase remained the same; the new figure was simply a tidying up exercise. More importantly, 130s were no longer built from "cut-and-shut" 110s, but had dedicated chassis built from scratch.
1994 saw another development of the Tdi engine, the 300Tdi. Although the 200Tdi had been a big step forward, it had been essentially a reworking of the old turbocharged diesel to accept a direct injection system. In contrast the 300Tdi was virtually new, despite the same capacity, and both the Defender and the Discovery had engines in the same state of tune, 111 bhp (83 kW), 195 ft·lbf (264 N·m).
Throughout the 1990s the vehicle attempted to climb more and more upmarket, while remaining true to its working roots. This trend was epitomized by limited edition vehicles, such as the SV90 in 1992 with roll-over protection cage, alloy wheels and metallic paint and the 50th Anniversary 90 in 1998 equipped with automatic transmission, air conditioning and Range Rover 4.0 liter V8 engine.
A new variant was the Defender 110 Double Cab, featuring a Station Wagon style seating area, with an open pick up back. Although prototypes had been built in the Series days, it was not until the late 1990s that this vehicle finally reached production.
Land Rover South Africa offered a unique Defender during the period the group was owned by BMW. Between 1997 and 2000, the Defender 90 and 110 were offered with a BMW petrol engine alongside the normal Tdi engine. The engine was the BMW M52 2800 cc, straight-six, 24-valve engine as found in the BMW 328i, 528i, 728i and the Z3. Power and torque output for this engine was 142 kW (190 hp) @ 5500 rpm and 280 N·m (207 lb·ft) @ 3500 rpm. This option was offered due to a demand for a petrol-driven alternative to the diesel engine after production of the V8 Defender had ended. The vehicles were built at Rosslyn outside Pretoria. Total production for the 2.8i was 632 Defender 90s and 410 Defender 110s. Early models were not speed-restricted, but later models were limited to 160 km/h.
In 1998 the Defender was fitted with an all-new 2.5 litre, five-cylinder in-line turbodiesel engine, badged the Td5. The Tdi could not meet upcoming Euro III emissions regulations so the Td5 replaced the Tdi as the only available power unit. The engine used electronic control systems and produced 122 hp (91 kW) @ 4850 rpm, 11 hp (8 kW) more than the Tdi, with improved refinement. Traditionalists were critical of the electronic systems deployed throughout the vehicle, but concerns that these would fail when used in extreme conditions proved unfounded.