The original Prius, launched in 1997 as the world's first mass-produced hybrid passenger car, featured a combined petrol engine and electric motor.
The power units can work separately, so that when the car is at low speeds, it is only using an electric motor.
When more power is needed, the petrol engine cuts in, assisted by electric power.
The new model features a new high-efficiency hybrid system that the firm claims could set new global benchmarks in environmental performance.
It is expected to appear in British showrooms later this year, powered by a 1.5-litre engine that Toyota claims is as fast as a 2.0-litre model. Prices and performance figures have yet to be announced.