The cigar-chomping Lee Iacocca, Ford's general manager in the early 1960s, knew of Shelby and knew that he was stuffing Ford engines into British-made sports cars.
It's unclear whether Iacocca approached Shelby or vice versa about turning the Mustang into a performance car.
But in Shelby, Iacocca found someone who knew his way around Ford's parts bin and whose name could bolster the Mustang's performance cred. In Iacocca, Shelby found someone willing to write the checks to make things happen with a minimum of interference.
"It was Lee Iacocca who really stayed behind us all the way, encouraged us, and then got us into the Mustang program," Shelby wrote in Alex Gabbard's 1990 book, Fast Mustangs.
Ford shipped a few early 1965 Mustang fastbacks for Shelby to test in California. And Shelby's track testing exposed some weaknesses.
Shelby told Ford the car needed quicker steering, stronger brakes and more power.
"Ford Motor Co. marketing executives were game to support almost anything Shelby could come up with, knowing the rub-off from a Shelby modified Mustang would increase sales of non-Shelby Mustangs," Wallace Wyss wrote in his 1977 book, Shelby's Wildlife: The Cobras and Mustangs.
With the Mustang deal in hand, Shelby rented a Los Angeles airport hangar in 1965 and set up a production line. Shelby got Ford to commit to giving him two days' of 1965 Mustang production from the San Jose, Calif., plant.
Performance tweaks included a hood with air scoops, a new intake with a Holley carburetor, a performance cam, exhaust headers, big disc brakes and a retuned suspension.
Horsepower jumped to 306, but because the Mustang was smaller, lighter and more agile than Detroit's mid-sized muscle cars, Shelby Mustangs occupied their own niche. Blue stripes were added down the hood and on the sides. A fiberglass cover was placed where the back seat would have been.
The car created a stir. The GT350 could do something its higher-powered Detroit muscle-car rivals could not: handle well.
Hal Sperlich, the Ford product planner who helped bring the Mustang idea to life, credits Shelby with helping build the Mustang's performance image.
"He came in and worked with engineering and styling and product planning and brought some of his ideas," Sperlich told Automotive News recently. "It was an alliance. He had a close relationship for a lot of years using Ford power in his cars and putting his signature to Shelbyized versions of Fords. He was a great, fun guy."
The arrangement lasted until the final 1966 Mustangs were built. Then Ford transferred production of Shelby Mustangs to a small company in suburban Detroit. The '67 Shelby Mustang got bigger and heavier. Shelby, tied up with Ford's efforts to race the GT40 at Le Mans and beat Ferrari, distanced himself from Ford.
The Shelby Mustang carried on until the 1970 model year, adding luxury and grand touring features and a convertible version. In the mid-1970s Ford angered Shelby by using the Cobra name on the Pinto-based Mustang II. In 1988, Shelby sued Ford for using the GT350 name on a Mustang.
By the late '90s, Ford and Shelby put their differences aside and Shelby helped develop the 2005 GT, the supercar created to celebrate the company's 100th anniversary.
Shelby continued working with Ford on the redesigned Mustang launched in 2005.
The most powerful American-made production car available today is the Shelby Mustang GT500 with its 662-hp V-8. It stays true to Shelby's original vision for the cars he helped create: that they could go straight from the showroom to the racetrack.
"Before Carroll left us, he spent hundreds of hours with the Ford engineering team," says Jim Owens, Mustang marketing manager. "He knew what it took to make a car a racing legend and he shared that with the Ford team. So a little bit of Carroll is in every Mustang we will produce now and into the next 50 years."