The key improvement in the Type XXI was greatly increased battery capacity, roughly three times that of the Type VIIC. This gave these boats enormous underwater range, and dramatically reduced the time spent near the surface. They could travel submerged at about five knots (9 km/h) for two or three days before recharging the batteries, which took less than five hours using the snorkel. The Type XXI was also much quieter than the VIIC, making it more difficult to detect when submerged.

The Type XXI's streamlined and hydrodynamically clean hull design allowed high submerged speed. The ability to outrun many surface ships while submerged, combined with improved dive times, made it much harder to chase and destroy. It also gave the boat a 'sprint ability' when positioning itself for an attack. Older boats had to surface to sprint into position. This often gave a boat away, especially after aircraft became available for convoy escort.

The Type XXIs had better facilities than previous classes, including a freezer for foodstuffs. Conveniences for the crew included a shower and a washbasin – crews on other boats spent weeks without bathing or shaving. The Type XXI featured a hydraulic torpedo reloading system that allowed all six torpedo tubes, located in the bow, to be reloaded faster than a Type VIIC could reload a single tube. The Type XXI could fire 18 torpedoes in under 20 minutes. The total warload was 23 torpedoes, or 17 torpedoes and 12 sea mines. The XXI featured an advanced sonar system which allowed aiming torpedoes without using the periscope, increasing stealth.