All Yukon XL 1500 models except Denali come with a 285-horsepower 5.3-liter Vortec V8. Denali comes with a 320-horsepower 6.0-liter Vortec V8. Yukon XL 2500 models offer a choice of the 6.0-liter V8 or 8.1-liter big-block V8. All Yukon XLs come with electronically controlled four-speed automatic transmissions.

Yukon XL 4WD models use a part-time system GM calls Autotrac. It has a 2WD mode that was revised for 2003 for more fuel-efficient operation. Shift into 4WD and it locks the front and rear axle speeds together. This is the traditional kind of four-wheel drive that is considered best for serious off-road driving. However, pressing a button switches the system to an Auto 4WD mode that automatically shifts torque between the front and rear wheels as conditions demand, good for wet pavement, gravel roads, or inconsistent conditions. Autotrac was revised for 2003 for improved feel in Auto mode when turning corners at low speeds. A locking rear differential is optional, but a good idea for heavy snow or serious off-road driving.

Denali uses a sophisticated full-time all-wheel-drive system. Denali trades the standard Yukon XL's black grille for a bright mask of fine-metal mesh, but swaps the chrome bumpers for body-color bumpers to keep the overall flash level about equal. Round fog lights are neatly tunneled into the lower part of Denali's unique front bumper. Oddly shaped lower body cladding incorporates front and rear stone guards and blends nicely into the Denali's color-keyed running boards.

Opting for Quadrasteer does not improve the appearance of the Yukon XL as ungainly fender flares are added to the rear to accommodate the significantly wider track (by five inches).