Produced between 1994 and 2000, the 1.7-liter BMW M41 or M41D17 diesel engine was found in all of its various bodies but only on the 3-Series E36. The popular 6-cylinder M51 diesel engine shares 86% of its parts with this power unit.

The engine was installed on:
- BMW 3-Series E36 in 1994 – 2000;
- BMW 3-Series Compact E46 in 1995 – 2000.
Specifications
| Production years | 1994-2000 |
| Displacement, cc | 1665 |
| Fuel system | prechambers |
| Power output, hp | 90 |
| Torque output, Nm | 190 |
| Cylinder block | cast iron R4 |
| Block head | aluminum 8v |
| Cylinder bore, mm | 80 |
| Piston stroke, mm | 82.8 |
| Compression ratio | 22.0 |
| Features | intercooler |
| Hydraulic lifters | yes |
| Timing drive | chain |
| Phase regulator | no |
| Turbocharging | yes |
| Recommended engine oil | 5W-40 |
| Engine oil capacity, liter | 5.0 |
| Fuel type | diesel |
| Euro standards | EURO 1/2 |
| Fuel consumption, L/100 km (for BMW 318tds 1996) — city — highway — combined |
8.8 5.2 6.5 |
| Engine lifespan, km | ~300 000 |
Disadvantages of the M41D17 engine
This diesel engine fears overheating, which leads to block head cracks;
The turbine has a limited resource; it typically starts to drive oil after 150,000 kilometers;
Poor hot start and floating engine speeds point to an early high-pressure fuel pump repair;
The engine becomes extremely foolish as a result of the EGR valve clogging rather quickly;
Up to 200 thousand kilometers may need to be replaced in the chain gas distribution mechanism.
