The Q7 sheds 716 pounds in the redesign and shrinks in size.
U.S. buyers will also find a downsized base engine in the 2016 Q7. The base model will be equipped with a 252-horsepower 2.0-liter turbocharged four-cylinder engine, a major shift from the base 280-hp 3.0-liter V6 engine in the 2015 Q7.
Audi will also roll out a Q7 diesel plug-in hybrid with quattro or all-wheel drive.
U.S. launch timing, EPA fuel economy estimates and pricing on the 2016 Q7 were not announced. The base 2015 Q7 with a 3.0-liter V6 engine and eight-speed automatic transmission returns 16 mpg in city driving and 22 mpg on the highway, according to the EPA.
Audi said the Q7's new efficient engines consume 26 percent less fuel on average.
"Although the exterior dimensions have gotten smaller, it offers substantially more interior room for passengers and luggage," said Audi AG in a statement.
The redesigned Q7 will also offer the latest driver assistance systems, infotainment modules and connectivity features. Smartphone integration with Google Android Auto and Apple CarPlay is new for the 2016 model year.
New driver assistance systems include adaptive cruise control with traffic jam assistant.
Options include a power cargo compartment cover and a heated windshield.
The 2016 Audi Q7 E-tron Quattro is the first plug-in hybrid from Audi with a diesel engine. It delivers 373 hp and has a range of 35 miles on a full battery charge.
"Scheduled to follow shortly after the market launch, the Audi Q7 E-tron Quattro is the world's first plug-in hybrid with a six-cylinder diesel engine and quattro all-wheel drive," Audi said.
Edmunds says: Major changes are in store for the Audi Q7, as it sheds some weight, becomes roomier and adds an exciting new plug-in hybrid model.