In lacking a grossly oversized rear wing, Toyota’s new GR Corolla almost looks reserved at first glance. But keen eyes partial to small and fun driver’s cars will quickly peg it as no ordinary Corolla—far from it. With flared nostrils, a tornado of an inline-three, and bulging fenders that make it 2.3 inches wider than its lesser kin, this hot hatchback is the clearest manifestation yet of Toyota president Akio Toyoda’s vision to inject more excitement into his company’s products.

Developed by Toyota’s performance and motorsports arm, Gazoo Racing, and built in a dedicated area of the company’s factory in Motomachi, Japan, the GR Corolla is a rally-car-inspired thoroughbred that in top-range Morizo spec even bares the Toyota boss’s nickname. Drop into the familiar Corolla interior and you’ll find soft, enveloping sport seats and a satisfyingly precise short-throw shifter for the six-speed manual, the only transmission offered. The configurable 12.3-inch gauge display eschews zany animations for easy readability, with the gear-selection indicator taking center stage. The pedals are spaced a bit far apart for easy heel-and-toeing, but the auto rev-matching feature (which can be turned off) works better than most Nikes will.

The GR awakens with a dull blat that is reminiscent of a four-cylinder. Only under load does the triple-exit exhaust emit the angry, offbeat thrum of a turbocharged 1.6-liter inline-three huffing a massive 25.2 psi of boost in standard tune. Horsepower is an even 300 at 6500 rpm—a big 185.4 ponies per liter—and torque tops out at 273 pound-feet in most versions. Not much happens below 3000 rpm. But the close-ratio gearbox keeps the engine in the middle of its rev range, where it hits hardest. With the three-cylinder at maximum snarl and the turbo chirping and whooshing loudly with every upshift, the 7000-rpm redline comes quickly. Estimated mid-four-second runs to 60 mph put the GR in the hunt with the best of the sport-compact segment.

But this car is about more than generating speed—it goads its pilot to orchestrate it. The standard GR-Four all-wheel-drive system can vary its front/rear torque split from 60/40 to 30/70 percent at the driver’s command, though the Track mode’s 50/50 split was our preferred setting for best balance. Front and rear Torsen limited-slip differentials—optional on the Core base model, standard on upper trims—further enhance traction, which, through tight corners, is tenacious. Combined with rabid turn-in response, a reinforced unibody, and a smidge of body lean, the GR Corolla feels sure-footed yet eminently tossable on its strut front and multilink rear suspension. Lay into the firm, linear brake pedal, and the four-piston front and two-piston rear stoppers are a match for the turbo three’s fury.

Like the best hot hatches, the GR Corolla can also be pleasingly civil—it’s still a Corolla after all, and it retains much of the model’s practicality and features, including adaptive cruise control. Its taut ride doesn’t punish your spine much, thanks in part to the meaty sidewalls of its 235/40R-18 Michelin Pilot Sport 4 summer tires (the Morizo gets 245-width Cup 2s). Factor in a light, easily modulated clutch pedal and a restrained amount of pops and bangs from the tailpipes, and there was little wearing on us after hours in the saddle of a Morizo example.

The GR will square off against the Honda Civic Type R and the Volkswagen Golf R when it goes on sale at the end of this year. Toyota will import about 5000 of the $36,995 Core models each year. The Circuit edition, with its bulged hood, carbon-fiber roof, and larger rear spoiler, will command $7000 more and account for an additional 1500 units. The Morizo, arriving later next year, will be priced for exclusivity at $50,995.

The GR Corolla joins the GR86 and the GR Supra in Toyota’s U.S. performance-car lineup. But unlike those two models, which Toyota co-developed with Subaru and BMW, respectively, the GR Corolla is an in-house effort. What Toyota has created is one of its most exciting driver’s cars ever.