The Mark II was first introduced into general service in April 1983 and incorporated numerous small upgrades as a result of the previous year's incursion into Lebanon. The new tank was optimized for urban warfare and low intensity conflicts, with a weight and engine no greater than the Mark I.

The Mark II used the same 105 mm main gun and 7.62 mm machine guns as the Mark I, but the 60 mm mortar was redesigned during construction to be located within the hull and configured for remote firing to remove the need to expose the operator to enemy small-arms fire. An Israeli-designed automatic transmission and increased fuel storage for increased range was installed on all further Mark IIs. Anti-rocket netting was fitted for increased survivability against infantry equipped with anti-tank rockets. Many minor improvements were made to the fire-control system. Updated meteorological sensors, crosswind analyzers, and thermographic optics and image intensifiers gave greater visibility and battlefield awareness.

Incrementally improved versions of the original Mark II were designated, with many of these tanks still in service today:

Mark IIB, with thermal optics and unspecified updates to the fire control system.
Mark IIC, with more armor on the top of the turret to improve protection against attack from the air.
Mark IID, with modular composite armor on the chassis and turret, allowing rapid replacement of damaged armor.