Production of the W168 A-Class began in 1997. It was also the first front wheel drive passenger car from Mercedes-Benz. Its front engine, front wheel drive layout was quite unusual for Mercedes. To date, more than one million units have been sold worldwide.

One innovation of the W168 was a frontal-impact absorption system called the "Sandwich" (see patents DE4326 9 and DE4400132 in the name of Mercedes-Benz). In the event of a violent frontal impact, the engine and transmission would slide underneath the floor below the pedals rather than entering the passenger compartment.

The W168 became infamous in 1997 after flipping over during the traditional "moose test" performed by the Swedish automobile publication Teknikens Värld. According to the report, the W168 overturned when maneuvering to avoid the "moose". Mercedes initially denied the problem, but then took the surprising step of recalling all units sold to date (2,600) and suspending distribution until the problem was solved by adding electronic stability control and modifying the suspension. This marked the world premiere of stability control in a small car. Nevertheless, the W168 A-Class was voted the worst-handling car in Britain in the Top Gear Survey 2007 (completed by owners of the vehicles).

As a result of the suspension stiffening described above, the ride on the W168 is very firm; this combined with the short wheelbase makes this car very jittery over rough surfaces. This is not a problem with the long wheelbase version of the car.