Microsoft announced on Jthat it would develop a native version of IE for 'Solaris and other popular variants of UNIX' to be available 'by the end of 1996' which would have 'equivalent functionality as that provided in Microsoft Internet Explorer 3.0', thus 'delivering on its commitment to provide full-featured Web browser support on all major operating system platforms' as well as 'supporting and promoting open standards, including HTML, ActiveX and Java'. The competition between Netscape and Microsoft heated up, with some saying the Internet community 'became polarized on the issue of which web browser had the most features.' Other new features included ActiveMovie multimedia API, HTML Layout Control, Quick Links toolbar, VRML. It could import favorites into IE3 from IE1 or 2. Unlike later IE versions, users who upgraded to IE3 could still use the last IE by converting the previous version to a separate directory. The user interface notably changes, with much larger buttons, with more intricate icons, and with a light gray design behind it. While IE1 and IE2 were said have 'paled' in comparison to Netscape, IE3 'delivers a crushing blow to Netscape'. CSS were introduced with version 3 of Internet Explorer. Later, Microsoft NetMeeting and Windows Media Player were integrated into the product and thus helper applications became not as necessary as they once were. It brought the browser much closer to the bar that had been set by Netscape, including the support of Netscape's plugins technology ( NPAPI), ActiveX, frames, and a reverse-engineered version of JavaScript named JScript. Version 3 included Internet Mail and News 1.0 and the Windows Address Book. In 1997, Spyglass threatened Microsoft with a contractual audit, in response to which Microsoft settled for $8 million U.S. Microsoft thus made no direct revenues on IE and was liable to pay Spyglass only the minimum quarterly fee. Internet Explorer 3.0 was released free of charge on the Augby bundling it with Windows 95 OSR2, another OEM release. 1.2 Internet Explorer version 3.0 for Macintosh.

Internet Explorer 3 is no longer supported, and is not available for download from Microsoft. Internet Explorer 3 is the last version of Internet Explorer to support Windows NT 4.0 versions below SP3 as the following version, Internet Explorer 4 will only support Windows NT 4.0 SP3 or later. In 1996 Microsoft said of its new browser 'Microsoft Internet Explorer 3.0 adds many new features which are great for HTML authors and demonstrates our accelerating commitment to W3C HTML standards.' This is the first version of Internet Explorer developed without Spyglass source code, but still used Spyglass technology, so the Spyglass licensing information remained in the program's documentation. There were 16-bit and 32-bit versions depending on the OS. Version 3 came bundled with Internet Mail and News, NetMeeting, and an early version of the Windows Address Book, and was itself included with Windows 95 OEM Service Release 2. This version was the first version of Internet Explorer to use the blue 'e' logo, which later became a symbol of the browser. It introduced support for ActiveX controls, Java applets, inline multimedia, and the Platform for Internet Content Selection (PICS) system for content metadata. IE3 was the first commercial browser with Cascading Style Sheets support. In September 1997 it was superseded by Microsoft Internet Explorer 4. During its tenure, IE market share went from roughly 3–9% in early 1996 to 20–30% by the end of 1997. It was the first more widely used version of Internet Explorer, although it did not surpass Netscape or become the browser with the most market share. It was Microsoft's first browser release with a major internal development component. It began serious competition against Netscape Navigator in the first Browser war. Microsoft Internet Explorer 3 ( IE3) is a graphical web browser released on Augby Microsoft for Microsoft Windows and on Janufor Apple Mac OS (see IE for Mac).

Windows internet for mac