The history of the Cortina Lotus began in 1961. Colin Chapman had been wishing to build his own engines for Lotus, mainly because the Coventry Climax unit was so expensive. Colin Chapman's chance came when he commissioned Harry Mundy to design a twin-cam version of the Ford Kent engine.

To homologate the car for Group 2, 1000 were required to be built in 1963, and the car was duly homologated in September 1963. In the same month, in the car's first outing, in the Oulton Park Gold Cup, the car finished 3rd and 4th behind two Ford Galaxies, but beat the 3.8-litre Jaguars which had been dominant in saloon car racing for so long. Soon Ford were running cars in Britain, Europe, and the USA, with Team Lotus running cars in Britain for Ford, and Alan Mann Racing running cars in Europe, also on behalf of Ford.

In 1964, a Cortina Lotus leading around a bend with its inside front wheel in fresh air became a familiar sight, as the cars were set up with soft rear suspension and a hard front end. Jim Clark won the British Saloon Car Championship easily, in the USA, Jackie Stewart and Mike Beckwith won the Malboro 12-hour, and Alan Mann Racing also performed well in the European Touring Car Challenge, including a 1-2 victory in the 'Motor' Six Hour International Touring Car Race at Brands Hatch. A Boreham-built car also won its class, came 4th outright, and won the handicap section, in the 4000 mile 10-day Tour de France. Other Cortina Lotus achievements included the Austrian Saloon Car Championship, the South African National Saloon Championship, the Swedish Ice Championship, and the Wills Six-Hour in New Zealand.

1965 saw the Cortina Lotus winning regularly, the car being more competitive due to the increased reliability of the new leaf spring rear end. Driving for Alan Mann Racing, Sir John Whitmore dominated and won the European Touring Car Championship in KPU-392C, Jack Sears won his class in the British Saloon Car Championship (a Mustang won outright), Jackie Ickx won the Belgian Saloon Car Championship, and a Cortina Lotus won the New Zealand Gold Star Saloon Car Championship. Other wins were the Nürburgring Six-Hour race, the Swedish National Track Championship, and the Snetterton 500.

In 1966, Team Lotus registered new cars for the British Saloon Car Championship, which was now open to Group 5 Special Touring Cars, as regulations had been changed. Fuel-injection and dry sumping were allowed, and with Lucas injection and tuning by BRM, the engines could produce 180 bhp (130 kW; 180 PS) at 7750 rpm. The cars also had the McPherson struts replaced with coil-springs and shock absorbers and a revised wishbone geometry. They scored 8 class wins, many driven by Jim Clark. In the European Touring Car Challenge, Sir John Whitmore scored another four wins.