The fourth-generation Avalon (XX40), debuting in 2012, marked a significant departure from its conservative styling. The sedan adopted an aggressive and dynamic design with a sloping roofline reminiscent of a fastback. Engineers retuned the suspension, making it stiffer to improve handling, a move that drew mixed reactions from traditional buyers accustomed to the car's 'sofa-like' comfort. The 3.5-liter V6 (268 hp) with a 6-speed automatic carried over as the base engine, but the major addition was the Avalon Hybrid, featuring a 2.5-liter four-cylinder engine paired with an electric motor (200 hp combined), delivering outstanding fuel economy.

The interior was completely redesigned, featuring premium materials, capacitive touch buttons on the center console, and the new Entune infotainment system. For the 2016 model year, the Avalon received a facelift, which included a wider front grille, updated lighting, and crucially, a retuned suspension to restore some of the comfort lost in the initial redesign. The fourth-generation Avalon successfully attracted a younger demographic to Toyota's flagship sedan.