Safety regulations kicked in for 1968 and the Volkswagen Karman Ghia added side marker lights and moved the gas filler from inside the trunk to the right front fender, behind a door. New seats had taller backs and the ignition key was now on the steering column. The hood release was inside the glovebox, shoulder belts were fitted and both air conditioning and a 3-speed semi-automatic gearbox (called the Automatic Stick Shift) were optional. New door handles were trigger-action designs and new paint colors were offered. A collapsible steering column was fitted, and a larger exterior mirror substituted.

The dashboard featured simulated woodgrain and a large speedometer in the center and knee bolsters underneath. Fresh air controls were improved, door lock buttons were now at the top of the doors. Front seats were curved for better support, and backrests could be released by a button hear the top. A rear window defroster vent was fitted to Coupes and an electric defroster available for extra cost.

The 1500 engine (actually 1493 cc) was continued for a second year, offering 44 bhp. It was accompanied by front disc and rear drum dual circuit brakes, and a 12-volt electrical system. An unexpected bonus was a new double-jointed swing-axle rear suspension which reduced the tendency of the rear wheels to tuck under when cornering.

Coupe sales rose to 24,729 and Convertible production totaled 5713. Prices rose slightly for the 1968 Volkswagen Karmann Ghia, with the Coupe costing $2254 and the Convertible $2449.

Some new exterior colors were offered and leatherette interior options were expanded. Nine exterior colors were available, including Velour Red, Black, Regatta Blue, Pine Green, Chinchilla Grey, Gobi Beige, Lotus White, Bermuda Blue and Cherry Red. Canvas tops were now generally Black unless specially ordered. Two-tone paint was available at extra cost on the Coupes.