The foundation of the RS500 lay in Ford Motorsport's campaign to create a Group A racing champion. Stuart Turner, appointed head of Ford Motorsport in Europe in 1983, worked with Walter Hayes — the executive who had championed the Ford GT40 and the Cosworth DFV Formula One engine — to develop a turbocharged Sierra capable of outright Group A victories. The result was the Sierra RS Cosworth, publicly launched in July 1986, of which 5,545 were built — just above the 5,000-unit minimum required for Group A homologation.
Of those 5,545, 500 were selected for conversion into the RS500 by Aston Martin Tickford, with work beginning after March 1987. The RS500 was announced in July 1987 and homologated in August 1987. Its core upgrade was a heavily revised Cosworth YBB engine featuring a thicker-walled cylinder block, a larger Garrett AiResearch T04 turbocharger, a larger air-to-air intercooler, a second set of four Weber IW025 fuel injectors and a second fuel rail (non-functional on road cars), an uprated fuel pump, and a larger airbox. Engine output increased to 227 PS at 6,000 rpm in road specification, while race-prepared versions could produce well in excess of 500 bhp. External differences from the standard RS Cosworth included a second lower rear spoiler below the original "whale tail," a Gurney flap on the upper wing for additional downforce, a redesigned front bumper with revised air intakes, and discreet RS500 badges on the tailgate and front wings.
From the moment of its August 1987 homologation, the Sierra RS500 Cosworth established near-total supremacy in Group A touring car racing. In the remaining six rounds of the 1987 World Touring Car Championship, Ford claimed pole position at every event and won four of them outright. The works Eggenberger Motorsport team secured the 1987 WTCC Entrants' Championship, though the team's cars were controversially disqualified from the Bathurst 1000 for wheel arch irregularities — a ruling that denied Klaus Ludwig and Klaus Niedzwiedz the drivers' title.
In the Deutsche Tourenwagen Meisterschaft in 1988, Klaus Ludwig driving for Ford Team Grab won the drivers' championship, with Wolf Racing taking the team title. Both were Ford works operations, and together they defeated Mercedes-AMG and BMW M Sport for the honours. By 1989 escalating weight and boost penalties — imposed partly in response to protests from rival manufacturers — had severely curtailed the RS500's competitiveness, and Ford withdrew from the DTM at the end of that season.
The British Touring Car Championship saw the RS500 win outright in nine of twelve rounds in 1987, and take every race from 1988 through 1990, culminating in Robb Gravett winning the 1990 BTCC drivers' title. The peculiar BTCC points structure, which rewarded class wins heavily, had prevented the Sierra from taking the overall drivers' title in the earlier dominant seasons despite its outright victories.
In Australia the RS500 was even more comprehensively dominant. Dick Johnson Racing won the Australian Touring Car Championship in both 1988 and 1989, with Dick Johnson and John Bowe finishing one-two in both seasons. The team achieved an important technical step early in 1988 by homologating a modified Ford nine-inch rear axle, eliminating the car's primary mechanical weakness. The RS500 won the Bathurst 1000 twice: in 1988 with Tony Longhurst and Tomas Mezera, and in 1989 with Johnson and Bowe. The car also won the Sandown 500 in both 1988 and 1990, and Glenn Seton took the 1990 Australian Endurance Championship.
In New Zealand, Robbie Francevic won the New Zealand Touring Car Championship in 1989 and 1990. The car also claimed the Japanese Touring Car Championship in 1987, 1988, and the 1989 manufacturers' title, as well as victories at the Fuji InterTEC 500 in 1987, 1988, and 1989, and the Guia Race of Macau in 1989. Eggenberger Motorsport won the 1989 Spa 24 Hours.
The RS500's championship titles span multiple continents and series: the 1987 World Touring Car Championship (entrants' title), the 1988 European Touring Car Championship (entrants' title), the Australian Touring Car Championship in 1988 and 1989, the 1988 Deutsche Tourenwagen Meisterschaft, the Japanese Touring Car Championship in 1987 and 1988, the New Zealand Touring Car Championship in 1989, 1990, and 1992, and the British Touring Car Championship in 1990. Motorsport Magazine credited the RS500 as statistically the most successful road-derived racing car of all time, having won 84.6 percent of all races it entered.
The RS500's dominance had lasting structural consequences for motorsport. Its unbroken winning record from 1987 through the early 1990s contributed directly to the abandonment of the Group A format by major championships, as rival manufacturers found it impossible to mount a credible challenge. The BTCC, DTM, and other series all moved away from Group A regulations from 1990 onward, partly citing the prohibitive development cost of matching a car that was already more than three years old and still winning every race it entered. Ford chose not to develop an evolution model given the Sierra's planned replacement by the Mondeo, and the RS500 remains one of the defining machines of the Group A era.