The history behind the special 289 Hi-Po engine started long before it was ever made famous by the Ford Mustang and Shelby Mustangs.
In 1957, Ford (under the direction of Robert McNamara) hooked up with Holman and Moody along side Smokey Yunick in an effort to revamp its racing efforts. They made famous the 312 c.i supercharged “Y block.” Due to an ongoing struggle with GM and factory backed racing projects, McNamara found himself more interested in politics than racing. In 1960 he left Ford.
About this same time, Lee Iacocca stepped in as general manager at Ford and began rethinking factory sponsored racing. He wanted Ford to put a strong emphasis on performance which began with all new light weight cast iron 221 c.i. V8 engine.
This Windsor V8 debuted in the 1962 Ford Fairlane. A short time later, the engine became the available as a 260 c.i. (with a 3.8 bore) and was the engine of choice for Lee Iacocca’s Falcon’s that were being raced in the “Rally” circuit in Europe. Almost simultaneously as Ford had introduced the new 260, an ex Le Mans winner (1959) and ex- chicken farmer/ named Carroll Shelby had contacted Ford by letter asking if there were any racing plans for the new Fairlane engine. Since the ‘performance’ plan was already in place, it didn’t take much persuasion by Carroll to land a few 260’s
. Shelby’s ultimate goal was to mate the small block V8 with an AC Ace body, allowing Shelby to build his own sports car, the Shelby AC Cobra.
1963 Fairlane's saw the arrival of an even larger bored out block that displaced 289 c.i. A High Performance version was built, creating the Hi-Po Fairlanes. Four engines were prepped and dynoed by Holman Moody before being dropped in the all new Ford Mustang. These four rally Mustangs competed in the Tour de France race, and were the first Mustangs to use the Hi-Po. Meanwhile, Shelby had been busy in his quest to build his new Shelby Cobra’s and secure homologation with the 260 and 289 “Cobra” powered engines. April 17, 1964 saw the arrival of Iacocca’s masterpiece after years in the making – the Ford Mustang.
Since the Hi-Po 289 was already available as an option for the Fairlane, it was natural offer it available in the new Mustang. June, 1964 is when the first Hi-Po equipped Mustangs hit the streets although the public got a glimpse of the engine in action during the Indy 500 as three convertible Pace Cars had a Hi-Po under the hood. 
Still, Iacocca was worried that the new Mustang wasn’t seen as high performance vehicle and needed proven racing history to help give it credibility. Shelby’s hard work proved valuable for both him and Ford. It was in both of their best interests to join forces once more. To help substantiate the performance of the Mustang, Ford turned to Shelby to build 562 1965 Mustang Fastbacks equipped with the potent Hi-Po 289, and thus the Ford Shelby Mustang was born.
(Courtesy: Mustang Race Cars by John Craft)
