A successor to the ZR-1 made its debut in 2001 as the Z06, giving a nod to the high-performance Z06 version of the C2 Corvette of the 1960s. Instead of a heavy, double-overhead cam engine like in the ZR-1, the Z06 used a high-output, tuned version of the standard LS1 Corvette engine (designated LS6), which initially produced 385 hp (287 kW). Although its total horsepower output was less than that of the last ZR-1, the Z06 was much lighter, and could out-perform the ZR-1 in every category except top speed. It also cost substantially less money than the ZR-1.

Chevrolet engineered several modifications for the Z06 to best use the increased power. Starting with the most structurally rigid body style, the hardtop or FRC, new components included: uprated FE4 suspension, larger wheels and tires, revised gearing ratios, and functional brake cooling ducts. The Z06 is 38 pounds lighter than a standard C5 hardtop thanks to weight-saving measures such as a titanium exhaust, thinner glass, lighter wheel, non-EMT tires, reduced sound proofing, fixed rear radio aerial, and a lighter battery. Starting with the 2002 model year, the LS6 engine output was increased to 405 hp (302 kW) due to a larger CFM air intake, stiffer valve springs, lighter sodium filled valves and more aggressive camshaft lift and timing.

The LS1 engine initially produced 345 hp (257 kW), subsequently increased in 2001 to 350 hp (261 kW).