The Z4 M Roadster was introduced in 2006 and is powered by the S54 straight-six engine shared with the E46 M3. The S54 was also on the Ward's 10 Best Engines list for 2001 through 2004. The engine in the North American Z4 M models are rated at 330 hp (246 kW) at 7,900 rpm, 3 hp less than the North American M3. In other markets, the power output is the same 252 kW (343 PS; 338 hp) as the M3. The engine had BMW double VANOS system and a compression ratio of 11.5:1. The torque generated by the engine amounted to 355 N⋅m (262 lb⋅ft) at 4,500 rpm. The torque was available from 2,500 rpm.
The Z4 M uses hydraulic power steering, unlike the electric power steering used by the rest of the Z4 range. Other changes include a wider front track, revised front suspension, wider tires (measuring 225/45 at the front, 255/40 at the rear), and steering geometry.
The M coupe's production began at the Spartanburg BMW plant in Greer on 4 April 2006.