In 1976, 400 examples of the Fiat Abarth 131 Rally were built for homologation purposes. These cars were built in a cooperation between Fiat, Bertone and Abarth. Bertone took part-completed two door standard bodyshells from the production line in Mirafiori, fitted plastic mudguards front and rear, a plastic bonnet and bootlid and modified the metal structure to accept the independent rear suspension. The cars were fully painted an trimmed and then delivered back to the Fiat special Rivalta plant where they received the Abarth mechanicals.

The street version of the car used a 16-valve DOHC derivative of the standard DOHC engine, which equipped with a double Weber downdraught carburettor produced 140 PS (103 kW; 138 hp). The street cars used the standard gearbox with no synchromesh (Rally type regulations required the use of the same type of synchromesh on the competition cars as on the street versions) and the hopelessly underdimensioned brake system of the small Fiat 127. Competition cars used dry sump lubrication and eventually Kugelfischer mechanical fuel injection. In race specifications, the engine produced up to 240 PS (180 kW) in 1980, being driven to World Championship status by Walter Röhrl.