Appearing in 2002, the third generation Prado had revised front suspension to improve reliability.

Development began in 1997 and design work in 1998, with the winning proposal originating from Lance Scott of the Toyota ED² design studio in France in late 1999. Engines include the 2.7 L (2693 cc) straight-4 3RZ-FE, 3.4 L (3378 cc) V-6 5VZ-FE and 3.0 L (2982 cc) straight-4 turbocharged diesel 1KZ-TE. In countries like China, a newly developed engine 1GR-FE V6 is available. The engine immobilizer became standard equipment in some markets.

J120
Overview
Also called	Lexus GX 470
Production	September 2002–August 2009
Assembly	Japan: Tahara, Aichi India: Bangalore
Designer	Lance Scott (1999, 2000)
Body and chassis
Body style	3/5-door wagon
Related	Toyota 4Runner
Powertrain
Engine	2.7 L 3RZ-FE I4 (petrol) 2.7 L 2TR-FE I4 (petrol) 3.0 L 5L-E I4 (diesel) 3.0 L 1KZ-TE I4-T (diesel) 3.0 L 1KD-FTV I4-T (diesel) 3.4 L 5VZ-FE V6 (petrol) 4.0 L 1GR-FE V6 (petrol)
Transmission	4-speed automatic 5-speed automatic 5-speed manual 6-speed manual
Dimensions
Wheelbase	3-door: 2,450 mm (96 in) 5-door: 2,790 mm (110 in)

In August 2004, the 3RZ-FE engine was replaced by 2.7 L (2694 cc) 2TR-FE engine and in July of the same year, the 5VZ-FE engine was replaced by 4.0 L (3955 cc) V6 1GR-FE engine with 5-speed automatic transmission available in late 2005. In North America, this model is known as the Lexus GX 470 with the 4.7 L (4663 cc) V8 2UZ-FE engine.

Diesel models have had the 1KZ-TE turbocharged diesel engine with maximum output rating 96 kW (131 PS; 129 hp) as well as the 5L-E natural aspirated diesel engine rating 70 kW (95 PS; 94 hp). In November 2006, Toyota introduced the 1KD-FTV turbocharged diesel (D-4D engine to meet Euro IV emission standards. This engine delivers 127 kW (173 PS; 170 hp) of power and 410 N⋅m (302 lbf⋅ft) of torque. The upgrade to the D-4D engine was also matched with transmission upgrades to the diesel range, with the 5-speed automatic and 6-speed manual transmissions added in line with the petrol powered range. From August 2007 the Prado received several equipment and safety upgrades. The car has won 3 awards for the best performance on a SUV type vehicle in Australia and US.

The 120-series Land Cruiser Prado shares the same suspension parts as the Hilux Surf/4Runner and FJ Cruiser for similar years.

There is a shorter three-door version of the 120-series, with a 125-code instead of 120. Engines are the same, most features are the same; just the 1KZ-TE was only available in five-door version. The three-door wagon features only two seat rows. The fuel tank is limited to 87 L, no sub-fuel-tank system available.

For model year 2007 on Japanese models only, G-BOOK, a subscription telematics service, is offered as an option.

The Japanese Prado consisted of 6 trim levels known as RX, RZ, TX, TX Limited, TZ and TZ 'G Selection' The highest specification model known as TZ 'G Selection' consisted of features like front driver and passenger heated seats, heated exterior mirrors, adjustable air suspension, hill start assist control downhill assist control, central differential lock and sometimes engine auto heating.

In China, Dadi Auto made two clones of the SUV called the Dadi City Steed and the Dadi Shuttle. Both models were produced from 2006 and 2007 respectively until 2012.