The Lotus 101 was Team Lotus's entry for the 1989 Formula One season. Gérard Ducarouge's departure during 1988 had necessitated the former Williams aerodynamicist Frank Dernie to be appointed as Technical Director in November 1988. Despite his appointment the majority of the work for the 101 had been conducted by chief designer Mike Coughlan. The 101 was to be a rushed design built within weeks and to a series of constraints.

Ducarouge's departure coincided with end of the 1,500 cc turbocharged era. Lotus, along with other competitors, now had to incorporate 3,500 cc normally aspirated engines into their cars. Judd were therefore enlisted to supply their CV 32 valve V8 engine, but as Lotus were only a "customer" (Judd's principal contact was the supply of their latest EV V8 engine to the March team) solutions were sought to make up the power deficiency by appointing Tickford to research and develop a five-valve-per-cylinder head. The use of the Judd engine did permit Dernie and Coughlan to design a smaller and lighter car than before; indeed the narrowness of the cockpit required Momo to build a special steering wheel to allow the drivers to fit their hands between the wheel and bodywork of the car.

The initial optimism and favourable reception by management and driver alike shortly evaporated, as the 101 proved to be a disaster. Not only were the customer Judd engines rated at around 610 bhp (455 kW) (about 80 bhp (60 kW) less than the dominant Honda V10 engine used by McLaren), but it was apparent that the Goodyear tyres that the team were using had been designed principally for use by the McLaren and Ferrari teams, who were able to test and tune their chassis to work better with the compounds.

The 101 failed to collect significant results as the season progressed, culminating in the events following the British Grand Prix where Nelson Piquet had driven to a fighting fourth-placed finish. The Chapman family, who were still the shareholders in Team Lotus International, persuaded Peter Warr and Chairman Fred Bushell (who was about to face charges arising from the De Lorean affair) to leave. Tony Rudd, who was at the time working for Group Lotus, was appointed executive chairman. Also the Tickford head was abandoned.

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