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Leo Fender's simple and modular design was geared to mass production, and made servicing broken guitars easier. Guitars were not constructed individually, as in traditional luthiery. Rather, components were produced quickly and inexpensively in quantity and assembled into a guitar on an assembly line. The bodies were bandsawn and routed from slabs, rather than hand-carved individually, as with other guitars made at the time, such as Gibsons. Fender did not use the traditional glued-in neck, but rather a "bolt-on" neck (which is actually affixed using screws, not bolts). This not only made production easier, but allowed the neck to be quickly removed and serviced, or replaced entirely. In addition, the classic Telecaster neck was fashioned from a single piece of maple without a separate fingerboard, and the frets were slid directly into the side of the maple surface—a highly unorthodox approach in its day (guitars traditionally featured rosewood or ebony fingerboards glued onto mahogany necks). The electronics were easily accessed for repair or replacement through a removable control plate, a great advantage over the construction of the then-predominant hollow-body instruments, in which the electronics could only be accessed through the soundholes.

In its classic form, the guitar is simply constructed, with the neck and fingerboard comprising a single piece of maple, screwed to an ash or alder body inexpensively jigged with flat surfaces on the front and back. The hardware includes two single coil pickups controlled by a three-way selector switch, and one each of volume and tone controls. The pickguard was first Bakelite, soon thereafter it was celluloid (later other plastics), screwed directly onto the body with five (later eight) screws. The bridge has three adjustable saddles, with strings doubled up on each. In its original design nearly all components are secured using only screws (body, neck, tuners, bridge, scratchplate, pickups to body, control plate, output socket); with glue used to secure the nut, and solder used to connect the electronic components. With the introduction of the truss rod, and later a rosewood fingerboard, more gluing was required during construction. The guitar quickly gained a following, and soon other, more established guitar companies (such as Gibson, whose Les Paul model was introduced in 1952; and later Gretsch, Rickenbacker, and others) began working on wooden solid-body production models of their own. A large chromed cover, often called the "ashtray", was fitted over the bridge for improved shielding, but this is rarely seen as most players find it impedes their style.

A huge range of aftermarket components are manufactured, including bridges with three vintage-look brass saddles, compensated (by having two separate string separation points on each saddle) to improve intonation. There are also "vertical stack" humbuckers which fit into a standard bridge in place of the traditional single-coil units and maintain the original appearance.

The original switch configuration used from 1950 to 1952 allowed selection of neck pickup with treble tone cut in the first position (for a bassier sound), the neck pickup with its natural tone in the second position with no tone, and in the third switch position both pickups together with the neck pickup blended into the bridge, depending on the position of the second "tone" knob. The first knob functioned normally as a master volume control. This configuration did not have a true tone control knob.

In 1952 the pickup selection circuit was modified by Fender to incorporate a real tone control. Between 1953 and 1967 the neck could be selected alone with a pre-set bassy sound and no tone control, in the middle switch the neck could be selected alone with the tone control and finally the bridge could be selected with the tone control. Although this provided the player with a proper tone control, this assembly did away with any sort of pickup combination. Eventually from late 1967 Fender again modified the circuit for the final time to give the Telecaster a more traditional twin pickup switching system: neck pickup alone with tone control in the first position, both pickups together with the tone control in the middle position and in the third position the bridge pickup alone with the tone control.

Typical modern Telecasters (such as the American Standard version) incorporate several details different from the classic form. They typically feature 22 frets (rather than 21) and truss rod adjustment is made at the headstock end, rather than the body end, which had required removal of the neck on the original (the Custom Shop Bajo Sexto Baritone Tele was the only Telecaster featuring a two-octave 24-fret neck). The three-saddle bridge of the original has been replaced with a six-saddle version, allowing independent length and height adjustment for each string. The long saddle bridge screws allow a wide range of saddle bridge positions for intonation tuning. The stamped metal bridge plate has been replaced with a plain, flat plate, and the bridge grounding cover (which, while helping with the shielding, impedes players who like to mute strings at the bridge with the side of the palm, and makes it impossible to pick near the saddles to produce the characteristic Telecaster 'twang') has been discontinued for most models.

During the CBS era in the 1970s, the Telecaster body style was changed to a new "notchless" shape, having a less pronounced notch in the crook where the upper bout meets the neck. The notchless body style was discontinued in 1982.

The short-lived Elite Telecaster of 1983 incorporated two specially designed humbucking pickups powered by an active circuitry that featured a "TBX" guitar expander and an MDX midrange booster with 12 dB of gain. Other features included a "Freeflyte" hardtail bridge and die-cast tuning machines with pearloid buttons. This guitar was among the latest CBS-era Fenders to feature a BiFlex truss-rod system, low-friction EasyGlider string trees and active electronics. After CBS sold Fender to a group of employees led by Bill C. Schultz in 1985, production ceased on the Elite Telecaster and other Elite models. Fender Japan made its own version of the Elite Telecaster in late 1984, which featured a 22-fret neck with medium-jumbo fretwire and a modern 9.5 inch fingerboard radius. Notable Elite Telecaster players include Johnny Hallyday, Dave Davies of The Kinks, Michael Houser with Widespread Panic, and Andy Summers of The Police.

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