Carroll Shelby gave up racing in 1959 for health reasons. In addition to setting up a high performance driving school, he also opened up the Shelby-American company. Their first order of business was importing the AC Cobras. As we all know, that venture proved to be highly successful. So in August, 1964, not long at all after the Mustang's public debut, Ford asked Shelby-American to develop a high-performance Mustang fastback.
Shelby wasted no time. He built two versions of the 1965 Mustang coupe - The 1965 Shelby Mustang GT350, built for public use and sale, and the GT350R, - a dedicated race car. In only one month - September 1964 - The first '65 Shelby Mustang GT350 race and street cars are built.
The first GT350s were the smallest and lightest of the GT 350 models. These first cars were often called "Cobra" Mustangs, trying to strengthen the marketing connection with Shelby, and included use of the Cobra emblem, similar paint schemes, and the optional "Cobra" valve covers on many GT350s.
All 1965 cars started with the K-Code 271 hp 289 cu in small block Ford. In the street-going version, it was modified to produce 306 hp. Marketing literature referred to this engine as the "Cobra hi-riser" due to its high-rise intake manifold. Beginning as a stock Mustang with a 4-speed manual, the cars were shipped to Shelby American, where they received the high-rise manifolds, had the stock Ford Falcon live rear axles replaced with heavy-duty Ford Galaxie rear axles, and were given larger, metallic-lined rear drum brakes and Kelsey-Hayes front disc brakes.
All 1965 GT350s were painted Wimbledon White with Guardsman Blue rocker stripes. Very few GT350s were actually delivered to the dealer with the optional "Le Mans" top stripes, which run the length of the entire car. Only 1/4 of the 562 1965 cars built had Le Mans stripes, but dealers often added the stripes, probably at the customer's request. Today, it is difficult to find a GT 350 not so equipped.
Many 1965 cars had the battery relocated to the trunk, which was changed mid-year from complaints of fumes. There was only one transmission available, a 4-speed Borg-Warner T-10 manual. The exhaust system in the 1965 GT350 was a side-exit dual exhaust with glass-pack mufflers. The 1965 GT350 had a full size spare tire mounted in place of rear seats, making it a 2-seat-only vehicle (to be allowed to race under SCCA regulations as "sports car"), and rode on either silver-painted steel wheels or special cast-magnesium center "Cragar Shelby" 15" rims with chromed center caps marked with a stylized "CS". Total 1965 model year production was 562 units.
Then there were the R models - dedicated track-duty cars. Shelby built 34 of the purpose-built racers. The GT350R spec cars were built specifically for competition use under SCCA rules for B Production. Both the R-model and public sale models debuted at Riverside Raceway in January, 1965, alongside the new 427 ci Cobra.
The 1965 GT350Rs were delivered from Ford's San Jose assembly plant in partially assembled form, ready for modification by Carroll Shelby's operation. For the first 3 months they operated out of Venice Beach, then relocated to Los Angeles International Airport. San Jose cars carried an "R" in the Ford VIN denoting that facility. Shelby performed many changes to the body for the GT350 - and the R model included a distinctive front fascia with a larger opening made of fiberglass that helped feed the oil cooler. Flares were added to the fenders to accommodate 15x7 inch wheels. Furthermore the side and rear windows were were replaced by Plexiglas with aluminum frames.
Underneath, Shelby changed the pickup points on the suspension, added traction bars for the rear suspension and installed a new differential. Inside, a new instrument cluster was added with a tachometer and oil pressure gauge. A large 4-point roll cage was installed with a 34 gallon fuel tank. The engine was thoroughly reworked to include Cylone Tri-Y headers, A Holley four-barrel carburetor, Cobra high rise aluminum intake manifold which produced around 360 horsepower, by some claims.
In only one month following it's debut, the GT350R won it's first race in the hands of Ken Miles. The car was so capable, it won the championship for three straight years.
The original 1965 GT350Rs were nearly unstoppable. One of them in particular is documented as the “winningest” Shelby ever, with 17 straight wins through 1969, driven by Charlie Kemp. It attained a measured 184 mph at Daytona in 1968 - the highest speed known for any 289-powered Shelby, including Cobras.
Almost immediately, the GT models became cars with a different focus than the originals. The 1966 GT350 featured a more comfortable ride, included rear seats, optional colors, and an optional automatic transmission. The trend for additional features continued in following years, with the cars becoming progressively larger, heavier, and more comfortable, losing much of their competitiveness in the process. The 1969 GT350s and 500s were largely styling modifications to a stock Mustang. By 1969 Carroll Shelby was no longer involved in the Shelby GT program, and the design was done in-house by Ford.