The second mass produced modification differed from the M4 in that two GMC 671 diesel engines were installed to make up for the Continental's insufficiency. The engine and transmission were pulled from M3A3 and M3A5 medium tanks. In April 1942 the first M4A2 prototype was tested, with full-scale production subsequently beginning.

The tank had a welded hull, and the front plate initially had viewing slits cut out, though armour covers were later welded on and periscopes added. From the beginning of 1944 the front plate was made from a single piece, while the driver and gunner hatches were moved to the roof of the hull. The angle of the frontal armour went from 56° to 47° from vertical. The low-revving diesel engine gave the M4A2 better off-road ability and significantly more range as opposed to carburetor engines.

Approximately 8,000 M4A2s were produced between April 1942 and December 1943.

The M4A2(76)W Sherman model ran on a GM 6046 diesel engine. Being built off the original M4A2, the hull construction was welded, which proved simpler to produce than casting. The M4A2(76)W variant, as indicated by the name, mounted the 76 mm gun instead of the usual 75 mm. Of the 49,234 Sherman produced in World War II, 2,915 M4A2(76)s were produced from April 1944 to May 1945. A significant number of units, around 2,070, were shipped to the USSR via Lend-Lease. The Shermans helped liberate Ukraine, Belarus, Poland, Czechoslovakia, and Austria, also seeing combat in the battle for Berlin.