Work began in 1996 when Reynard Motorsports' special vehicles division partnered with Panoz to create a GT-class racing car for the inaugural FIA GT Championship. Don Panoz insisted the car maintain an American character by being based — at least visually and conceptually — on the Panoz Esperante roadster. One practical consequence of this decision was that the engine was mounted ahead of the cockpit rather than in the mid-engine position used by rivals from Mercedes-Benz, McLaren, Porsche, and Lotus. The front engine placement gave the GTR-1 a large, bulging nose and a cockpit positioned far rearward, producing the hulking front-heavy silhouette that led to the Batmobile comparisons.
For power, Panoz turned to Roush Racing — better known for its NASCAR work — to build a 6.0-litre V8 based on Ford's DOHC architecture, developed from the 4.6-litre unit used in the production Esperante. Élan Power Products maintained and developed the engines throughout the programme. To meet homologation requirements mandating that race cars be based on road-legal production vehicles, Panoz built a single street-legal GTR-1 featuring a full interior and a slightly smaller 5.3-litre V8.
Six GTR-1s were constructed for the 1997 season, split among three teams: the Panoz factory effort (two cars, North American programme), French squad DAMS (two cars, European FIA GT), and British team David Price Racing (two cars).
The GTR-1 debuted at the 1997 12 Hours of Sebring but failed to finish after 108 laps. David Price Racing's car made its European debut at Hockenheimring for the FIA GT Championship, finishing 11th overall. DAMS debuted a round later at Silverstone, also failing to finish.
The factory Panoz team found success in North American events. They won a GT-class-only event at Road Atlanta, then took the GTS-1 class win at the 6 Hours of Watkins Glen, finishing third overall just two laps behind the winning prototype. Further class wins followed at Sonoma Raceway and Laguna Seca. Panoz finished second to Porsche in the constructors championship for the season. In Europe, DAMS and David Price Racing struggled against better-funded factory operations. At the 24 Hours of Le Mans, three GTR-1s were entered by David Price and DAMS; none finished, primarily due to engine failures, and one DAMS chassis was destroyed by fire.
For 1998, the GTR-1 received revised bodywork with extended front and rear sections for increased downforce. The factory team expanded to compete in both IMSA GT and the new United States Road Racing Championship, where they won three of five GT class events before losing the manufacturers championship to Porsche by three points — while winning the teams championship. In IMSA the factory team dominated, winning seven of eight races including an overall victory at the rain-shortened Sebring Fall Festival, securing both the constructors and teams championships.
In Europe, DAMS improved considerably, scoring points in seven of ten FIA GT rounds with podium finishes at Hockenheimring and Dijon-Prenois, earning fifth in the teams championship.
The most technically ambitious development of 1998 was the GTR-1 Q9 Hybrid, nicknamed "Sparky," developed in partnership with British firm Zytek. At a time when the General Motors EV1 and early Toyota Prius were the extent of public electrification, Panoz deployed a hybrid drivetrain in a top-level endurance racing car — over a decade before Le Mans mandated hybrid systems. The Q9 used a Zytek oil-cooled brushless DC electric motor powered by a VARTA 300-volt, 260-cell nickel-metal hydride battery pack, contributing approximately 195 horsepower on demand — around 30 percent of the combined 650-horsepower output. Regenerative braking recharged the battery. The car wore a purple livery with large yellow lightning bolt graphics. Testing revealed the Q9 was too heavy for Le Mans competition; a single race appearance at the inaugural Petit Le Mans resulted in a 12th-place finish before the programme was cancelled.
With the FIA GT Championship abandoning the GT1 class for 1999, the GTR-1 was confined to the new American Le Mans Series. Two cars ran at Sebring without finishing, and after the debut of the new LMP-1 Roadster-S prototype at Road Atlanta, the GTR-1 was retired from front-line competition. The Roadster-S shared the same fundamental front-engine chassis architecture as the GTR-1, representing a direct lineage between the two cars.
In 2003, Panoz revived GTR-1 chassis number 003 — previously run by David Price Racing — as a closed-cockpit Le Mans prototype for the 1000km of Le Mans, entered by the factory JML Team. It retired with electronics problems. The car was subsequently purchased by French team Larbre Compétition, modified further, and renamed the Panoz GTP. It raced at the 2004 12 Hours of Sebring (ninth overall), the 2004 24 Hours of Le Mans, and a Le Mans Series round at Spa-Francorchamps before being permanently retired.
The GTR-1 stands as one of the most original American racing cars of the 1990s. Its front-engine layout was a deliberate cultural statement from Don Panoz — a rejection of European convention in favour of an identifiably American design language. The Q9 Hybrid programme anticipated the hybrid revolution in endurance racing by more than a decade, and the GTR-1's success in North American GT competition helped establish the credibility of the Panoz brand as a serious racing constructor.