The SEAT Ibiza GTI 16v was the first SEAT with a 4-valve-per-cylinder engine and the most powerful version of the second-generation Ibiza, until the unveiling of the first Ibiza CUPRA. It was also the basis for the development of SEAT’s World Rally Champion Ibiza Kit Car.

The Ibiza II had been introduced in 1993 and was the first model to be built at SEAT's new Martorell factory. The initial range included a GTI version powered by a 2.0-litre, 115 HP engine. A year later, in March 1994, SEAT unveiled the Ibiza GTI 16v at the Geneva Motor Show, the new top of the Ibiza range, which went on sale later that year, in November.

The GTI 16v was powered by a smaller capacity, 1.8-litre, but more powerful 130 HP engine, which was also fitted in the Córdoba model. The 1.8i 16v engine gained 15 HP thanks to the multi-valve cylinder head and the Digifant electronic engine management system.

At the time, this 1.8i 16v engine was used exclusively by SEAT and had been redesigned and updated by engineers at SEAT’s Martorell Technical Centre. An earlier version had been used in the SEAT Toledo. At the same time as the Ibiza got the 1.8i 16v engine, the Toledo was fitted with a 150 HP 2.0i 16v.

Unlike the GTI 2.0, the Ibiza GTI 16v was only available with the three-door body, thus reinforcing its sporty character. The equipment was very complete, with air conditioning, ABS (optional), EDS traction control, alloy wheels, power steering, height-adjustable front seats and steering wheel, electric windows, central locking, electrically adjustable mirrors, fog lights, radio cassette with 6 speakers and airbags for the driver and front passenger. The seats were special, with exclusive upholstery and "GTI 16v" embroidered on the seat back.

Aesthetically, the GTI 16v differed from the GTI by the legend "Twin Cam 16 valves" on the lower part of the doors (where the GTI bore the initials "EFI Electronic Fuel Injection"), which referred to the DOHC valve gear. The GTI 16v also premiered a special body colour, kiwi yellow, which would become famous thanks to the successes of the Ibiza Kit Car.

The Ibiza GTI 16v was a very important model in SEAT's racing history. Firstly, it was the model used in the new Ibiza Tarmac Rally Cup organized by SEAT from 1995, similar to the Ibiza Gravel Cup that had been held with Ibiza 2.0 GTIs since the previous year.

Secondly, the Ibiza GTI 16v was the star in SEAT's return to the World Rally Championship for the first time since the 1977 Monte Carlo Rally. The GTI 16v was homologated in Group A on 1 July 1994 and made its debut in November at the Rally Catalunya-Costa Brava, where Jordi Ventura's semi-works car finished fourth overall and third in its category.

During 1995, SEAT Sport continued to develop the Ibiza GTI 16v Gr. A in the World Championship, with a sensational one-two by Erwin Weber and Toni Rius in Greece’s very tough Acropolis Rally. The SEAT Ibiza GTI 16v Gr. A was the basis for the Ibiza Kit Car, which went on to compete in the World Championship full-time in 1996. The Ibiza Kit Car would win three consecutive 2-litre World Rally Championship titles.

To celebrate the Ibiza Kit Car's success, SEAT launched the Ibiza CUPRA in late 1996, the first CUPRA model in history. Powered by the 2.0 16v 150 HP engine, the Ibiza CUPRA replaced the GTI 16v in the Ibiza range, which continued to feature the 2.0 115 HP GTI version.

SEAT HISTÓRICOS keeps this unit of the Ibiza GTI 16v, registered in September 1995. This same unit was on loan to Barcelona’s Design Museum for several years, since the museum’s opening in December 2014. The Ibiza GTI 16v was on display in the "Product design, cultural heritage" room. The museum highlighted the design of Giorgio Giugiaro and SEAT’s Technical Centre, and described the Ibiza II as "The most recognised utility vehicle on the market".