In 1978, work began on the M60A3 variant. It featured a number of technological enhancements, including smoke dischargers, a new flash-lamp pumped ruby-laser based rangefinder (AN/VVG-2) that could be used by both commander and gunner, and an M21 ballistic computer, and a turret stabilization system.
Late production M60A3s omitted the commander's cupola (Israel Defence Force armor doctrine required tank commanders to fight commander-exposed, and it was discovered that non-penetrating hits on the vehicle could dislodge the cupola from its mount while the commander was in it). Compared to a conventional pintle mount, the remote-controlled M85 machine gun was relatively ineffective in the anti-aircraft role for which it was designed. Removing the cupola lowered the vehicle's relatively high silhouette. The cupola's hatch also opened toward the rear of the vehicle and was dangerous to close if under small-arms fire owing to an open-locking mechanism that required the user to apply leverage to unlock it prior to closing.
The M60A3 was phased out of US service in 2005, but it has remained a front-line MBT into the 21st century for a number of other countries.
While overall a less advanced tank than the M1 Abrams, the M60A3 did have some advantages over some M1 models:
- The M60A3 TTS had a better thermal imaging system than that of M1 tanks up into the 21st century, when many M1s were upgraded with newer 2nd generation systems.
- The M60A3 had an exterior phone for infantry to talk directly to the crew inside, though this feature was removed from most M60A3s in its later life. This feature was also installed on some M1 tanks with the TUSK upgrade kit.
- The M60A3's diesel engine had lower overall performance, but also it had lower cost, required less maintenance, and had better fuel efficiency.
- The exhaust temperature of an M1's turbine is very high, which makes it dangerous for infantry to take cover behind it. This was and is not the case with the diesel engine on the M60.
- The escape hatch located under the hull of the M60A3 is not present on the M1 Abrams, making it more difficult for the crew to escape a battle-damaged Abrams or evacuate casualties than from an M60A3.
- The M60 series' M68A1 105 mm main gun fires a much wider variety of ammunition than the 120 mm smoothbore on the M1A1 series, because doctrine only required APFSDS and HEAT.
- The M60 series has instrumentation that allows indirect fire as ad-hoc artillery if needed by virtue of having a compass on board.