The idea for a high-performance four-wheel-drive car was proposed in 1977 by Audi's chassis engineer, Jörg Bensinger, after he found that the Volkswagen Iltis military vehicle could outperform other vehicles when tested in the snow. An Audi 80 variant was developed in co-operation with Walter Treser, Director of Pre-Development.

The resulting Audi Quattro shared many parts and platform with the Coupé version of the Audi 80 (B2). It was introduced to European customers in late 1980, featuring Audi's quattro permanent four-wheel drive system, and the first to mate the front-engine, four-wheel-drive layout with a turbocharged engine. The original engine was the 2,144 cc (2.1 L), longitudinally-mounted inline-5-cylinder 10 valve SOHC, with a turbocharger and intercooler. It generated 147 kW (200 PS; 197 hp) and torque of 285 N⋅m (210 lbf⋅ft) at 3,500 rpm, propelling the Quattro from 0 to 100 km/h (62 mph) in 7.1 seconds, and on to a top speed of over 220 km/h (137 mph).

The rally versions of the Quattro were first to take advantage of the then-recently changed rules that allowed the use of four-wheel drive in competition racing. It dominated rallying for the first half of the 1980s. To commemorate the success of the original vehicle, all subsequent Audi production automobiles with this four-wheel-drive system were badged with the trademark quattro with a lower case q initial.

A red 1983 Quattro was driven by DCI Gene Hunt (played by Philip Glenister) in the television drama Ashes to Ashes (aired on BBC1 from 2008 to 2010), his call to action being "Fire up the Quattro".