1NZ-FXE is the earliest 1.5 L (1497 cc) version built in Japan. Bore is 75 mm (2.95 in) and stroke is 84.7 mm (3.33 in). It features forged steelconnecting rods and an aluminum intake manifold. The engine has a high physical compression ratio of 13.0:1, but the closing of the inlet valve is delayed. The net result is that the engine has a greater effective expansion than compression—making it a simulated Atkinson cycle, rather than a conventional Otto cycle.

The reduction in cylinder charge means reduced torque and power output, but efficiency is increased. This combination makes the 1NZ-FXE suitable for use with theHybrid Synergy Drive, where peak torque and power are of less importance. Output is 57 kW (76 hp) at 5000 rpm with 115 Nm (85 lb·ft) of torque at 4000 rpm. Thermal efficiency is about 37%.[1] Production was stopped in 2009, at arrival of Prius III, which replaced the 1NZ-FXE with the 2ZR-FXE.

In 2012, upon the arrival of the Prius c (North America), the Prius Aqua (Japan), and the Yaris Hybrid (Europe), an improved version was introduced. Without any belt-driven accessories, and a physical compression ratio of 13.4:1, the new version delivers an output of 54 kW (74 hp) at 4800 rpm with 111 Nm (82 lb·ft) of torque at 3600–4400 rpm.

The 1NZ-FXE Hybrid Synergy Drive in the Toyota Prius has won several International Engine of the Year awards:

Best Eco-friendly 2000
Best Eco-friendly 2001
Best Fuel Economy 2005
Best 1.4-litre to 1.8-litre 2005
Best Fuel Economy 2006
Best 1.4-litre to 1.8-litre 2006

 Toyota Prius
Toyota Prius c
Toyota Yaris
Toyota Corolla (Axio/Fielder)
Toyota Sienta second generation