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Announced on 22 October 1992,[5] the Impreza was released in Japan in November and offered in either front-wheel drive (FWD) or all-wheel drive (AWD) versions and as a four-door sedan or five-door wagon (Touring).[6] The car used a shortened version of the Legacy's floor pan.[7] According to a Motor Trend article written March 1992 on page 26, the name of Subaru's new compact was, initially, to be called the Loyale, displaying an official photograph of the four-door sedan. In late 1995, a two-door coupe was introduced. In Japan it was called Impreza Retna. Initial engine choices included 1.5, 1.6, 1.8, and 2.0-liter naturally aspirated engines.

Subaru chose to continue their longstanding use of the boxer engine in the Impreza. According to Subaru, their configuration of the engine inline with the transmission minimizes body roll due to the lower center of gravity compared with offset engines in most other vehicles. The boxer design provides good vibration mitigation due to the principles of a balanced engine because the movement of each piston is largely countered by a piston in the opposing cylinder bank, eliminating the need for a counter-weighted rotating crankshaft (harmonic balancer), but with some vibration from offsets. Torque steer is also reduced with this type of powertrain layout since the front drive shafts are of equal length and weight.