The TMG Yaris R1A has been developed as an entry-level machine priced at approximately €22,500.
Toyota said the car will be able to compete in the World Rally Championship under the R1A regulations once it is homologated by the FIA before the end of the year.
The Yaris will run as 'zero car' duriung Rallye Deutschland and it will be driven by Isolde Holderied.
"It is a great thrill for TMG to return to rallying, a discipline in which we enjoyed a great deal of success in the past," said Toyota Motorsport president Yoshiaki Kinoshita.
"The TMG Yaris R1A is a completely different project compared to our WRC past; it is an affordable but exciting car which makes rallying's major events accessible to a whole range of participants.
"We have already received numerous inquiries about this car so we know there is a huge appetite in the rally world for a new Toyota; I hope this is the start of a new rally dynasty at TMG."