Following the Merkava Mk.3 design and its improvements, the Merkava entered its fourth generation iteration by upgrading most aspects of the tank, particularly in the crew's ability to observe and react to changing scenarios outside the tank. The Merkava Mk.4 began development in the late 1990s, and featured component upgrades: a new fire-control system and hunter-killer system for the commander and gunner, the loader had access to a new 10-round revolving magazine, modular composite armour was added on all sides, and a more powerful engine was installed. However, the biggest change was the upgrade to the electronic systems within the tank. Computerization allowed each crew station to have screens for information management and observation. The commander had access to a battle management system that allowed communication of information across different units. This new Merkava Mk.4B entered service in 2004 and slowly became the primary main battle tank of the Israel Defense Forces, gradually replacing the older Mk.2 and Mk.3 in service.

Introduced in Update "Wind of Change", the Merkava Mk.4B is one of the most recent subvariants of the Merkava main battle tank. With up to 800-1,200 mm of protection on the turret front with its non-explosive reactive armour (NERA), it can effectively resist even hits from ATGMs. Overall, the Merkava Mk.4B is well protected against HEAT warheads. However, despite engine improvements, the Merkava Mk.4B becomes progressively heavier, reducing its mobility in comparison to main battle tanks from other nations.