Like many British specialist manufacturers, AC Cars had been using the smooth, refined Bristol straight-6 engine in its small-volume production, including its AC Ace 2-seater roadster. This had a hand built body with a steel tube frame, and aluminium body panels that were made using English wheeling machines. The engine was a pre-World War II design of BMW which by the 1960s was considered dated. Bristol decided in 1961 to cease production of its engine and instead to use Chrysler 331 cid (5.4 L) V8 engines. Although untrue, it is commonly believed that AC was left without a future source of power and that American ex-racing driver Carroll Shelby saved the company from bankruptcy. AC started using the 2.6 litre Ford Zephyr engine in its cars. In September 1961, Shelby airmailed AC a letter asking them if they would build him a car modified to accept a V8 engine. AC agreed, provided a suitable engine could be found. He first went to Chevrolet to see if they would provide him with engines, but not wanting to add competition to the Corvette they said no. Ford however, wanted a car that could compete with the Corvette and they happened to have a brand new thin-wall small-block engine which could be used in this endeavor. It was Ford's 260 in³ HiPo (4.2 L) engine - a new lightweight, thin-wall cast small-block V8 tuned for high performance. In January 1962 mechanics at AC Cars in Thames Ditton, Surrey fitted the prototype chassis CSX0001 with a 221ci Ford V8. After testing and modification, the engine and transmission were removed and the chassis was air-freighted to Shelby in Los Angeles on 2 February 1962. His team fitted it with an engine and transmission in less than eight hours and began road-testing.

Production proved to be easy, since AC had already made most of the modifications needed for the small-block V8 when they installed the 2.6 litre Ford Zephyr engine, including the extensive rework of the AC Ace's front end. The most important modification was the fitting of a stronger rear differential to handle the increased engine power. A Salisbury 4HU unit with inboard disk brakes to reduce unsprung weight was chosen instead of the old ENV unit. It was the same unit used on the Jaguar E-Type. On the production version, the inboard brakes were moved outboard to reduce cost. The only modification of the front end of the first Cobra from that of the AC Ace 2.6 was the steering box, which had to be moved outward to clear the wider V8 motor.

From the late 1980s onwards, Carroll Shelby and associated companies have built what are known in the hobby as "Continuation Cars", Shelby authorized continuations of the original AC bodied Shelby Cobra series. Initially the car everyone wanted in a Continuation was a 427 S/C model which was represented in the CSX4000 series. This was meant to continue where the last 427 S/C production left off, at approximately serial number CSX3560 in the 1960s. The initial CSX4000 series cars were completed from new old stock as well as newly manufactured parts. Gradually as the vintage parts supply ran low, newly constructed frames and body panels were obtained from a variety of suppliers. The production of chassis numbers CSX4001 to CSX4999 took roughly 20 years and many different business relationships to complete. All models of Cobra produced are available now as continuations. In 2009, CSX4999 was produced, concluding the 4000 series. Production has continued with the CSX6000 serial numbers, featuring "coil over" suspension. The 289 FIA "leaf spring" race version of the car is reproduced as CSX7000, and the original "slab side" leaf spring street car is the CSX8000 series.To date most continuations are produced in fiberglass, with some ordering cars with aluminum or carbon fibre bodywork.