Having already established a winning formula with the LMP-1 Roadster-S, the LMP07 can be seen as an evolution of its basic layout. The same font-engine design with a high nose would be retained, while most of the new design elements would be seen in the shallow valleys between the fenders and engine cover, as well as around the cockpit. The LMP07 was designed to attempt to get the car's center of gravity as low as possible in order to improve its handling capabilities.
First and foremost, the shallow bodywork separating the large engine cover and the wheel fenders was redesigned. Instead of a large horizontal edge creating a scoop around the engine, the air would instead be allowed to flow to large vertical intakes placed on either side of the cockpit. This opening up of the area in this valley allowed excess air to better flow out of the back of the car, under its rear wing. To assist in this, large vertical fins were placed on the inside of the fenders, extending off the back of the car to form the rear wing supports. This feature allowed for chassis rigidity, better airflow through the channels, and an improved safety structure. Due to the fins serving as safety structures, this meant that similar structures were not necessary around the cockpit, allowing for even more obstructions in the center of the car to be eliminated, lowering the overall height of the bodywork and further aiding airflow. The cockpit surround was similar to that used on the LMP-1 Roadster-S.
The nose of the car would also be refined, with the NACA duct from the LMP-1 abandoned. Instead, two small porthole intakes would be used, allowing for the bodywork to be closer to the airbox and further lower the height of the bodywork. Brakes cooling was also redesigned, with two large vertical vents cut into the bodywork on either side of the nose, replacing the large gap below the nose that had been used on the LMP-1. At the sides of the car, the complex concave venting of the LMP-1 was simplified for the LMP07, with a large intake for the rear brake cooling being placed in nearly vertical bodywork, and a large square exit vent in front of the rear wheel well for the engine.
The engine for the LMP07 would be a brand new unit built by Zytek. Panoz wished to use a smaller engine in order to bring down the overall weight and center of gravity of the car without major sacrifices to power output. The compact 4.0 litre Zytek units, maintained by Élan, would be lighter and slightly smaller, yet would later be found to lack the power and durability of the older 6.0 litre units.
Following off-season testing, the second chassis would make its debut at the first race of the 2001 season, competing alongside two older LMP-1s. The LMP07 would finish third behind two Audi R8s and a lap ahead of the best LMP-1 Roadster-S. With the performance capabilities of the LMP07 shown, both chassis fully replaced the LMP-1s for the 12 Hours of Sebring. However neither car would finish, suffering from mechanical problems early in the event.
When the American Le Mans Series season moved to Europe, the LMP07s were able to fix their mechanical problems and both cars finished at Donington Park. The cars would only manage sixth and eighth places however, with a privateer LMP-1 Roadster-S taking fifth. Problems would once again hit the team at Jarama, as the lone finishing car could manage a mere 14th place. At the 24 Hours of Le Mans, the cars once again suffered problems and both would be retired in the first few hours of the event. Both cars were also slow in comparison to their contemporaries, managing to record only the 19th and 21st fastest times in qualifying, nearly ten seconds slower then the Audis.
Following the performance troubles of the LMP07, most notably at Le Mans, Panoz decided that the cars need to be reworked in order to remain competitive as well as durable. Panoz made the decision to bring back the LMP-1 Roadster-S, completing the season with the older cars while work continued on the LMP07s. By the end of the year, it was decided that it would be easier to upgrade the existing LMP-1s instead of attempting to fix the LMP07s. The three chassis built were therefore sold off to privateer teams for their own use.
MBD Sportscar would purchase two chassis for the 2002 season, adapting the new Mugen V8 to the chassis. Debuting at Sebring, the two cars would continue their difficulties, including one car catching fire. For the rest of the season, although the cars were more reliable, the LMP07-Mugens would only be able to finisher better then the factory upgraded LMP01 Evos on one occasion. One MBD entry would also run the 24 Hours of Le Mans but once again fail to finish. MBD Sportscar would abandon the series soon after Le Mans, leaving them to finish seventh in the team championship. The LMP07s would be retired from competition with no other teams wishing to purchase the cars.