Launched in 2002, the W211 E-Class was a huge improvement over the previous model and was rated as a substantially better vehicle Launched in 2002, the W211 E-Class was a huge improvement over the previous model and was rated as a substantially better vehicle than its long time rival BMW 5-series (which had previously been rated as better in all areas). The W211-based W219 CLS-Class 4-door coupe was introduced in 2005 to attract younger customers. In many Northern-European countries the E-Class is used as a taxi and so the image is not viewed as being exclusive enough along with its traditionally 'old-man's car' image. The W211 E-Class was facelifted in 2006 to freshen up its appearance and primarily to improve quality and technical aspects of the car. The largest engine in the E-class range is the E500 (badged E550 in the U.S.) which had its engine size increased from 5 litres to 5.5 litres in 2006 along with the facelift. There is also an AMG model badged E63 AMG.

Mercedes-Benz introduced their BlueTec Diesel system to the E-Class at the 2006 North American International Auto Show as the E320 CDI BlueTec. BlueTec is a two-phase system for cleaning diesel emissions. The first phase makes the E320 CDI legal in 45 of the 50 United States (plus the District of Columbia). The second phase uses urea for further reductions to meet the more stringent standards of California, Maine, Massachusetts, New York, and Vermont. Sales of E320 CDI BlueTec began in autumn 2006 as a 2007 model, but 50-state legal models with urea injection will only be introduced in 2009 model year.

The W211 model of the E-Class became somewhat infamous for its poor reliability. Consumer Reports classified the W211 model's reliability as "poor," its lowest rating, and declared it one of the "least reliable luxury cars", but the newer 2007 models have rebound on quality, with JD Power giving the E class, the best in the mid size luxury segment award.