Design work on this new car had began just prior to Porsche's announcement in 1998. An open-cockpit prototype, it originally planned to use a variation of Porsche's traditional turbocharged Flat-6 engine. By early 1999, the Flat-6 would be abandoned due to difficulties in using the aged design. Porsche would instead turn to the use of a naturally-aspirated V10 engine that had originally been built in 1992. At that time, Porsche was providing engines for the Footwork Arrows Formula One team. They had initially used the 3512 3.5 litre V12 engines without much success, and Porsche had developed a new 3.5 litre V10 for 1992. However, Footwork decided to end their partnership with Porsche before the end of the 1991 season, so the new V10 was shelved. Requiring an advanced naturally aspirated engine, Porsche decided to develop these V10s for the prototype. The engines were expanded to 5.5 litres and had their pneumatic valve systems removed in order to increase longevity and endurance.
The first chassis began construction in the summer of 1999, with Lola Cars International building the carbon fiber tub. The new V10 would require slight modifications to the design work, including a large rear hump to accommodate the engine and its airbox integrated into a new single rollbar behind the cockpit (a design element Audi was also developing for their Audi R8 at the time). Suspension and transmission elements were borrowed and upgraded from the LMP1-98.
On November 21, 1999, just before the first chassis was completed, Porsche officially announced that the project was to be canceled. Porsche's official reasoning was that engineering staff on the LMP project would be needed for the new Cayenne SUV project which was more economically important to the company. Porsche was also content to continue development of the 911 GT3-R which had become the dominant car in the lower GT classes. It is also believed that Ferdinand Piëch, chairman of the Volkswagen Group, wanted the new Audi R8 to compete uncontested at the 24 Hours of Le Mans. Piëch supposedly offered aid in development of the Cayenne SUV in return.
Although the project was canceled, Porsche allowed for the prototype to be completed and conduct a two day test at the Weissach test track. Allan McNish and Bob Wollek both tested the car. Following the test, the car would be placed in storage and has not been seen since.
This concept would later become a production car with the same name, varying little from the initial concept. The racing engine was further refined with the addition of VarioCam and an expansion to 5.7 litres, bumping power to 612 horsepower. The sequential racing transmission was abandoned for a more traditional six-speed. The production Carrera GT would be sold from 2004 to 2006.
Porsche would not return to prototype racing until 2005 with the debut of the RS Spyder, although it competes in the smaller LMP2 class it has still managed to take overall race victories in the American Le Mans Series, including 12 Hours of Sebring in 2008.