In the late 1970s, Italian manufacturer Lamborghini entered into an agreement with BMW to build a production racing car in sufficient quantity for homologation. The result was sold to the public, from 1978 to 1981, as the BMW M1. It was the first and only mid-engined BMW to be mass produced. It employed a twin-cam M88/1 3.5 L 6-cylinder gasoline engine with Kugelfischer injection. A version of this motor was later used in the South African version of the BMW 745i, of which 209 examples were built between 1984 and 1986, as well as the E24 BMW M6/M635CSi and E28 BMW M5. The engine had six separate throttle butterflies, four valves per cylinder and produced in the street version, giving a top speed of . Turbocharged racing versions were capable of producing around .
The M1 coupe was hand-built between 1978 and 1981 under the Motorsport division of BMW as a homologation special for sports car racing. The body was designed by Giugiaro, taking inspiration from the 1972 BMW Turbo show car. Originally, BMW commissioned Lamborghini to work out the details of the car's chassis, assemble prototypes and manufacture the vehicles, but Lamborghini's financial position meant that BMW reassumed control over the project in April 1978, after seven prototypes were built. Only 456 production M1s were built, making it one of BMW's rarest models. The spirit of the M1 lived on in the first-generation M5, as both models shared the same (though slightly modified) engines.
The M1 had various successes in motorsports, including winning the Group B championship in 1984. In 2004, Sports Car International named the car number ten on the list of Top Sports Cars of the 1970s.
The series ran for two years, with Niki Lauda winning the 1979 season, and Nelson Piquet the 1980 season. After BMW met the standards for Group 4, the Procars were used by various teams in the World Championship as well as other national series.
In April 2008, BMW unveiled the M1 Homage Concept to commemorate the 30th anniversary of the M1. The concept vehicle uses a mid-engine layout and borrows styling cues from both the original M1 and the Turbo show car.