Helmut Werner Bönsch, BMW’s director of product planning, and Alex von Falkenhausen, designer of the M10 engine, each had a two-litre engine installed in a 1600-2 for their respective personal use. When they realized they had both made the same modification to their own cars, they prepared a joint proposal to BMW’s board to manufacture a two-litre version of the 1600-2.

The 2002 Turbo was launched at the 1973 Frankfurt Motor Show. This was BMW’s first turbocharged production car and the first turbocharged car since General Motors’ brief offerings in the early 1960s. It produced 127 kW (170 hp) at 5,800 rpm, with 240 N⋅m (180 lb⋅ft) of torque. The 2002 Turbo used the 2002 tii engine with a KKK turbocharger and a compression ratio of 6.9:1 in order to prevent engine knocking.