Released on February 25, 2009 in Japan, Initial D Arcade Stage 5 was the second game in the series released on the Sega Lindbergh hardware. A few notable differences include massive physics changes. Compared to Arcade Stage 4/Extreme Stage, which used "drifting" physics, Arcade Stage 5 featured more realistic driving physics, which included tire and brake wear down. Although the tire and brake wear are not displayed anywhere in the game, experienced players can notice the difference in the change in physics as they progress in races.

New characters that appeared for the first time in the game are Kobayakawa, Satoshi Omiya, Imposter Project D, Kai Kogashiwa (R.T. Katagiri S.V.), and Hideo Minagawa. New courses such as Happogahara, which used from Arcade Stage Ver.1 to Arcade Stage Ver.3/Street Stage (only daytime used is night) and only Extreme Stage appeared with full daytimes between day and night and Nagao, R.T. Katagiri S.V.'s home course.