The K21 IFV is designed for deployment in 21st century battlefield environments.

Enemy threats in future wars are likely to be diverse and three- dimensional. Simple infantry transport vehicles have limited flexibility and usually lack sufficient firepower as well as the ability to coordinate with main battle tanks. The changing battlefield environment, to include digital communications and control, called for the development of greatly improved armored combat vehicles with a high level of firepower, mobility and compatability.

The XK21 KNIFV's chassis is constructed entirely out of fiberglass, reducing the weight of the vehicle and enabling it to travel at higher speeds without bulky and powerful engines. The NIFV is be lighter than other IFVs, including the American Bradley series, increasing both speed and payload. The design was finally deemed production-ready in 2009, following 10 years in development and a research budget expenditure of approximately USD $80m. More than 85% of the vehicle's design is domestic. However a redesign is in order following the sinking of two vehicles while engaged in amphibious operations, a board of inquiry found that the problem was a lack of buoyancy, a malfunctioning wave plate and a technical problem with the drain pump, all of which will corrected for in the new design.

The two-man turret on the XK21 will be armed with an S&T Dynamics K40 40 mm cannon capable of firing APFSDS, high-explosive, smoke and multipurpose munitions, and a 7.62 mm machine gun. This will be combined with an advanced fire-control system and gun stabilizer usually found on third-generation main battle tanks that will make the XK21, together with the German Puma, able to move and engage the targets with high degree of accuracy at the same time. The ammunition for the autocannon is stored under the turret.

The 40 mm cannon can fire up to 300 rounds per minute, with a projectile velocity of up to 1,005 m/s. The improved APFSDS rounds fired from it will be able to penetrate up to 160–220 mm of armor, slightly higher than other APFSDS rounds, due to the self-sharpening process as the round penetrates the armour.

The multipurpose munition has several modes including proximity, air burst, armour-piercing and fragmentation. The mode can be configured by the XK21's FCS, which then transmits the necessary data to a small programmable fuse system inside the round before it is fired. This allows more control over the trajectory and impact of the round, expanding the scope of possible targets from medium armored vehicles to aircraft and infantry personnel.

Anti-tank armament includes indigenous 3rd-generation ATGM, with performance similar to the Israeli Spike and armour penetration from 700 mm to 1,000 mm of RHA base.

The fire-control system is able to spot and track targets as far away as 6,000 meters away and identify them from up to 3,000 meters away. IFF sensors are also present. The vehicle will also have hunter-killer capabilities with its separate commander's sight (IFV Commander's Panoramic Sight or ICPS) and gunner's sight (IFV Gunner's Primary Sight or IGPS), which can detect both ground and aerial targets. The sights are designed by Samsung Thales.

The gunner's sight is equipped with a third generation thermal viewer and a 1.54 μm laser range-finder. It can detect targets from 6,000 meters away and identify them from 3,000 meters away. The commander's sight is equipped with the same system as the gunner's. This will allow the gunner to use the commander's sight to engage targets if his own sight is disabled or destroyed. The commander of the vehicle also has the ability to override the command to take control of the turret and gun from the gunner.

Although not much is known about the composition of the XK21's armour, the frontal armour of the vehicle is specifically designed to protect against large caliber automatic cannon rounds, primarily the 30 mm APDS munitions (30x165mm) for 2A72 automatic cannon used on BMP-3, which has approximately 50 mm armour penetration at ranges of 1,000 m. The side armour is designed to protect against 14.5 mm AP rounds, which has approximately 25 mm armour penetration at ranges of 1,000 m. The top can withstand fragments from 152 mm artillery shells exploding as close as 10 meters. Speculations have been made and it is assumed that the KNIFV has multiple layer armour (with S-2 glass fiber and ceramic complex) including lightweight aluminium alloy.

The vehicle has a soft self-sealing fuel tank that can absorb the impact of a projectile. There is also an automatic fire suppression system inside the vehicle to extinguish any internal fires that might erupt.

The XK21 PIP will include an active protection suite and hard-kill anti-missile system similar to the AWiSS that will also be utilized for the K2 PIP. This will increase the vehicle's ability to defend itself against various ATGMs.

The XK21 is able to carry a total of 9 passengers and 3 more vehicle crew members. With the Battle Management System, the vehicle crew and passengers inside the vehicle can be instantly notified about the environment around them, improving their situational awareness. A 15-inch screen is installed inside the passenger compartment, which provides various data from the BMS. The vehicle is mounted with an external CCD camera, and the passengers inside can survey the environment using the same screen.

The XK21 is equipped with Doosan D2840LXE V-10 diesel engine, equipped with a turbocharger. The vehicle itself is approximately 25 tonnes which, combined with the total output of the engine, gives it a power/weight ratio of approximately 27 hp/t. The XK21 PIP will feature an improved version of the engine that will give the vehicle an increased power of 840 hp.

A newly developed semi-active ISU, or In-arm Suspension Unit, is available for the XK21. The same unit is to be used on the K2 Black Panther. Despite having the same ISU used on the K2 Black Panther, the XK21 cannot change its posture.

The vehicle can travel on both land and water. "Pontoon System" gives more buoyancy to float on water when additional weight is put on to the vehicle.