Lancia had already built one batch of homologation specials with the first series Integrale and in May 1989 announced the second, a revised 16-valve model. A variety of upgrades were made but most important was the new four valve cylinder head. This was joined by a more responsive Garrett T3 turbo with larger injectors and better intercooling plus a new overboost system for increased torque. As a result, output rose from 185 to 200bhp, peak power now being developed 500rpm higher (at 5500). For the first time, more drive was sent to the rear wheels than front, the torque split being altered from 47/53 front/rear to 56/44. An updated dual circuit braking system improved directional stability, the wider 7x15-inch wheels (up from 6x15) enhancing grip. To accomodate the new wheels and tyres, Lancia also had to widen all four arches and make some minor changes to the suspension geometry.

Fitting the 16-valve engine meant the bonnet now came with a prominent bulging section making it instantly identifiable. Otherwise, the only cosmetic changes were new badges front and rear. Buyers could further equip their cars with the optional four channel second generation ABS, a full leather interior, electric sunroof and air conditioning. Weight inevitably rose slightly compared to the 8-valve model, an extra 25kg bringing the total up to 1292kg. However, the various mechanical improvements resulted in substantially quicker acceleration figures, 0-62mph dropping from 6.4 to an incredible 5.7 seconds whilst top speed rose from 133 to 137mph. Unfortunately though, Lancia didn't offer the 16-valve engine in a catalysed form meaning cars destined for both German and Swiss markets had to be fitted with special 181bhp 8-valve units.