Proton Saga was launched in September 1985 by Malaysia's then Prime Minister, Mahathir Bin Mohamed. When asked why he chose this particular name, he replied as "saga" (Abrus precatorius) is a type of soft, fragile but productive seed commonly found in Malaysia, and joked that the Proton Saga 1.3 litre engine "is as strong as the saga seed". Before the production of Proton Saga, a contest was held to choose the name of the first national car, and the name Saga was chosen from the winner of the contest, Ismail Jaafar, a retired military soldier.
The first known Proton Saga to roll off the production line was presented to the Malaysian National Museum as a symbol of the beginning of the Malaysian automotive industry. Tun Dr. Mahathir also drove a prototype Proton Saga fitted with a 4G63 2.0L engine and a Jalur Gemilang across the Penang Bridge and to Penang Airport during the opening ceremony of the bridge on 14 September 1985.
Early Saga models were powered by SOHC 8-valve 4-cylinder petrol engines sourced from Mitsubishi, available in both 1.3- and 1.5-litre displacements. Both engines were available with a 5-speed manual transmission, but a 3-speed Mitsubishi Tri-matic automatic was available with the 1.5-liter engine in 1987.
The Saga was originally offered as a 4-door saloon, followed by the addition of a hatchback variant, introduced in 1988 as the Proton Knight and was later known as Saga Aeroback. The Proton Knight was designed for the European market as the hatchback was more popular in United Kingdom.
In 1989, Proton sold the Saga in the United Kingdom with the slogan Japanese Technology + Malaysian Style = Proton. Since then, United Kingdom contributes most of Proton's export sales. The Saga name was not used and it was simply known as the Proton 1.3 or 1.5. The UK models reverted to the dashboard used in the Mitsubishi Lancer, complete with HVAC controls not found in the domestic model.
In 1990, the line-up was revised with the introduction of 12-valve Megavalve engines, which increased power ratings to 75 bhp (56 kW) (from the original 70.5 bhp (53 kW) in the former 8-valve (Magma) version) for the 1.3-litre engine, and 90 bhp (67 kW) for the 1.5-litre engine. On domestic models, the Saga also gained the "Megavalve" moniker. Minor exterior modifications included a new grill and wraparound black trim pieces. In addition, rear seat belts and a third brake light were fitted as standard.