The next A4, internally designated Typ 8E, debuted on October 10, 2000, now riding on the Volkswagen Group B6 (PL46) platform. The car's new styling (by Peter Schreyer in 1997) was a great success, inspired by the C5 (second-generation) Audi A6 introduced in 1997. The 1.6 litre base model powerplant remained unchanged, but most other petrol/gasoline engines received either displacement increases, or power upgrades. The 1.8 litre 20-valve Turbo was now available in two additional versions, with 150 PS (110 kW; 148 bhp) or 180 PS (132 kW; 178 bhp), this one with a standard six-speed manual gearbox, while the naturally aspirated 1.6 litre inline-four engine and 2.8 litre V6 were replaced by 2.0 litre, and all-aluminium alloy 3.0 litre units, still with five valves per cylinder, the most powerful of which was capable of 220 PS (162 kW; 217 bhp) and 300 newton metres (221 lb·ft) of torque. The 1.9 Turbocharged Direct Injection (TDI) engine was upgraded to 130 PS (96 kW; 128 bhp), with Pumpe Düse (Unit Injector) (PD) technology, and was now available with quattro permanent four-wheel drive, while the 2.5 V6 TDI high-end model was introduced with 180 PS (132 kW; 178 bhp) and standard quattro. This generation of quattro consisted of default of 50:50 front to rear dynamic torque distribution. A Bosch ESP 5.7 Electronic Stability Programme (ESP) system, with Anti-lock Braking System (ABS), brake assist, and Electronic Brakeforce Distribution (EBD) were standard across the range.

The Avant was introduced in June 2001 and arrived in European showrooms in September 2001.

For 2002, Audi increased power in the 1.8 Turbo engines to 163 PS (120 kW; 161 bhp) and 190 PS (140 kW; 187 bhp) – the 190 PS variant designated by a red 'T' on the boot lid, both available with four wheel drive and in the 2.5 TDI intermediate version to 163 PS (120 kW; 161 bhp). A 2.0 engine with Fuel Stratified Injection (FSI) was also available. A year later, Audi reintroduced the S4, now powered by a 344 PS (253 kW; 339 bhp) 4.2 L V8 engine, as well as an A4 Cabriolet convertible variant (Typ 8H), finally replacing the 80-based Audi Cabriolet which had been discontinued in 2000. It included an electro-hydraulic operated roof, which lowered in under 30 seconds and incorporated some styling changes, such as body-coloured lower bumper and sill panels, which later found their way to the saloon version.

Audi introduced a continuously variable transmission developed by LuK, named multitronic, which replaced the dated conventional automatic transmission on front-wheel drive models. The transmission won considerable praise from the automotive press, and is generally regarded as being the best of its type in the world, due to its light weight and promptness in response. This high strength chain driven CVT was made from highly durable metals and utilised a very high grade, purpose-designed fully synthetic lubricant. However there have been widespread complaints from consumers around the world that the transmission box is prone to electronic glitches as well as mechanical problems.

Borrowing from the Audi A6, the boot was redesigned to remove the extension of the top edge with a smoother fold line. The rear light assemblies now formed part of the top line, these styling cues were eventually borrowed by other European as well as Asian manufacturers.

A sport package named 'Ultra Sport' was introduced in the North American market shortly before the B6 was replaced by the B7. It included aluminium interior trim and door sills, "S line" steering wheel, front and rear spoilers, side skirts, and quattro GmbH designed 18-inch RS4 alloy roadwheels.