The SQ5 performance SUV is the first Audi S model vehicle to feature a diesel engine. The primary power plant is a 3.0 litre (2967 cc), twin-turbo V6 engine coupled to an 8-speed Tiptronic transmission, developing 313 PS at 3900–4500 rpm, and 650 Nm of torque at 1450–2800 rpm. It also features Audi's signature quattro permanent all-wheel drive system with torque vectoring transfer. Sport suspension lowers the vehicle body by 30 mm (1.18 in) and 20-inch 5 parallel-spoke wheels with 255/45 tires are fitted as standard, with the option of upgrading to 21-inch wheels. Other features of the SQ5 are black front brake callipers with Audi 'S' badges, an optional Audi drive select system, a platinum-grey single-frame grille with galvanized double bars, two SQ5 unique body colours (Estoril Blue or Panther Black), optional lunar silver headlining, Pearl Nappa leather/Alcantara power-adjustable sport seats with optional leather upholstery in a choice of four colours, brushed aluminium inlays with optional Carbon Atlas, Piano finish or Aluminium/Beaufort wood trim panels.

The SQ5 TDI accelerates from 0–62 mph in 5.1 secs, and is electronically limited to 155 mph. This is comparable to rival range-topping performance SUVs with diesel engines, such as the Porsche Cayenne S Diesel (0–60 mph: 5.7 s) and BMW X5 M50d (0–60 mph: 5.4 s), and also to high-performance petrol-powered SUVs, such as the Mercedes-Benz ML63 AMG (0–60 mph: 4.8 s), Porsche Cayenne Turbo S (0–60 mph: 4.7 s). It should be noted that these listed rivals are all larger and heavier, falling into the mid-size SUV class, and, as such, command significantly higher asking prices. A more realistic comparison may be made with the BMW X3 xDrive35d, which delivers slightly better economy (46.3 mpg to the SQ5's 41.5), though slightly lower performance (0–62 mph: 5.8 s, max speed: 149 mph).

The SQ5 went on sale in the first quarter of 2013.