The 1968 Cougar changed little in outward appearance from 1967, with the exception of side-marker lights. Under the hood, however, a multiplicity of engines was available. The base motor became the 210 bhp 302 cid V-8 with a two-barrel carburetor, or 230 bhp with a four-barrel carburetor. Later in the year a 195 bhp 289 cid V-8 was available for the base car.

The 390 cid Marauder V-8 returned in two stages of tune, good for 280 bhp and 325 bhp, depending on the carburetor. Later in the year the four-barrel 390 model was designated 390 GT and a 428 cid V-8 was added, good for 335 bhp.

The most desirable engine was the NASCAR-based 390 bhp, 427 cid monster, available in the high-performance GT-E. It could be recognized by the blacked-out grille with a horizontal strip across it, and dummy hood scoops. It was only available with a 3-speed automatic transmission. Curiously, the two-barrel, 280 bhp version of the 390 engine was also only available with an automatic. All other engines were available with 3-speed, 4-speed (close- or wide-ratio) or automatic.

Demand for the Cougar stayed strong enough that a production line was added in San Jose, though demand would skid somewhat to 113,726 units, with 32,712 XR-7s. Base price was now $2,910, with the XR-7 from $3,209, the GT from $3,313 and the GT-E from $4,221. GT-E numbers were quite limited, reflected in their value today.

The options list was extended for 1968, partly due to the number of engines available. Merc-O-Matic transmission $206.65 with 302 V-8, $226.10 with the 390 V-8. The 3-speed gearbox cost $79, 4-speed was $184.02, 4-speed with GT Group $105.02. Air conditioning cost $360.99, front and rear shoulder/seat belts were $29.61 each pair, adjustable front headrests were $42.75, cruise control was $71.30, AM/FM stereo was $121.25, and a tape deck was $195.15. Two-tone paint cost $31.10 and a vinyl roof was $41.60. Mercury calculated 86.8% of Cougars were built with automatic transmission, 87.3 with power steering and 38.6% with power brakes.

A total of 16 exterior paint colors were available for the 1968 Cougars and 10 interior colors: Exteriors were: Onyx, Glacier Blue, Nordic Blue, Lime Frost, Saxony Yellow, Polar White, Madras Blue, Caribbean Blue, Sea Foam Green, Grecian Gold, Black Cherry, Diamond Blue, Wellington Blue, Augusta Green, Fawn and Cardinal Red. The 10 interior colors included Black, Dark Blue, Light Blue, Dark Red, Saddle, Aqua, Light Ivy Gold, Dark Ivy Gold, and Parchment. Bucket seats could be vinyl, comfort-weave vinyl and leather with vinyl, while bench seats were only available in vinyl. Vinyl tops were available in Black, White, Sandalwood, Buckskin, Dark Blue or Dark Green.

Mercury had disbanded Gurney’s Trans Am team at the end of the 1967 season, as Ford pinned its hopes on the Mustang team. A bad call perhaps, as Mark Donohue and Roger Penske trounced the blue oval with the Camaro. It was especially poignant as Cougar-mounted NASCAR veteran Tiny Lund won nine races and the championship of the new Grand Touring Class, while Lloyd Ruby and David Pearson also scored one win each.