The BMD-3 is the successor to the BMD-1 and BMD-2 AIFVs. The BMD-3 features a brand new chassis fitted with the complete turret of the BMP-2 infantry fighting vehicle. The BMD-3 retains the boat-shaped hull with the two-man turret located in the forward third of the chassis. The BMD-3 has much better amphibious capability than its predecessors. There is more room inside the vehicle, a significant increase in firepower, with the two-man turret offering better overall command and control of the vehicle and its weaponry. The BMD-3 can be airdropped from transport aircraft with the complete crew of seven men remaining inside the vehicle. In the past, the crew was dropped separately, and it often took a considerable time for them to locate the vehicle. By dropping the BMD-3 with its crew ready in the vehicle, the element of surprise associated with airborne operations is enhanced. The BMD-3 is of all-welded construction which provides the crew with protection from small arms fire and shell splinters. The crew consists of commander, gunner, driver, and four infantrymen, with the commander normally dismounting with the squad. A further three infantrymen can be carried in an emergency in the rear.

The two-man power operated turret is armed with a 30-mm 2A42 dual feed cannon which is fitted with a distinctive muzzle brake and is stabilized in both elevation and traverse. Maximum effective range when firing AP-T (armor piercing-tracer) ammunition is 2000-m, and when firing HE-I (High Explosive-Incendiary) ammunition is 4000-m against an area target. A 7.62-mm PKT machine-gun is mounted coaxially to the right. Mounted on the roof is an ATGM launcher for either the AT-4 SPIGOT or AT-5 SPANDREL. Mounted on either side of the turret is a bank of three 81-mm electrically operated smoke dischargers firing forwards. Mounted at the front of the BMD-3 on the left side is an AG-17 30-mm automatic grenade launcher while on the right bow is a 5.45-mm RPKS machine-gun.

Each of the bow weapons is operated by one of the infantrymen seated in the front of the BMD-3. The power pack is located at the rear of the hull and consists of a 2V-06 water-cooled diesel developing 450-bhp which gives a very high power-to-weight ratio of 34 hp/ton. The hydroneumatic suspension of the BMD-3 is adjustable to give a ground clearance of between 130-mm and 530-mm, although for normal road travel it is 450-mm. The BMD-3 is fully amphibious being propelled by two water jets mounted on either side at the rear of the vehicle.