Cadillac is all the way back. The revival began not in Detroit but at the Nürburg­ring, Germany’s legendary racetrack and development facility where the original CTS was honed in 2002. Although that sedan’s track-tuned handling—and the Led Zeppelin ad soundtrack—fairly howled that this wasn’t the Caddy of yesteryear, its dowdy, plasticky interior was same-old General Motors.

But the company’s engineers kept the faith and a second home at "the Ring," where virtually every German luxury and sports car earns its wings. The result is the second-generation Cadillac CTS: still an affordable alternative to a BMW or Benz, but now a legitimate luxury sport sedan both inside and out.

The updated cabin’s shapely contours, leather chairs and markedly improved craftsmanship elicit an immediate response: That’s more like it. A pop-up navigation system features the intuitive, touch-screen operation that still eludes most German makes. The crisp Bose audio system offers a forty-gig hard drive that stores songs from CDs or flash drives and smoothly manages an iPod.

An optional 304-horsepower, 3.6-liter V-6 features direct fuel injection, a technology that increases power and saves fuel. So equipped, the CTS scampers to 60 mph in 5.9 seconds and hums to a top speed of 151 mph.

During my trek along the Rhine River and northwest into the Eifel Mountains, I was taken with the Cadillac’s Lexus-like quiet and nicely weighted steering. But the payoff came at the Nürburgring’s Nord­schleife circuit. As I lapped the diabolical hundred-turn track, which Scottish racer Jackie Stewart dubbed "the Green Hell," the CTS exercised its Deutsche finishing-school credentials, setting a zesty pace through the blind turns, the brutal pavement and the nearly one thousand feet of elevation changes.

Sure, Cadillac lost its self-proclaimed "Standard of the World" status long ago. But by refusing to give up or look back, the carmaker has created the modern standard for American luxury sedans. Oh, and a friendly heads-up to the Europeans: A five-hundred-plus-horsepower CTS-V version is expected to hit showrooms in 2008.