The single photon counting microstrip detector MYTHEN III was developed at the Paul Scherrer Institute to satisfy the increasing demands in detector performance of synchrotron radiation experiments, focusing on time-resolved and on-edge powder diffraction measurements. Similar to MYTHEN II, the detector installed on the Material Science beamline covers 120° in 2θ. It is based on the MYTHEN III.0 readout chip wire-bonded to silicon strip sensors with a pitch of 50 µm, and it provides improved performance and features with respect to the previous version. Taking advantage of the three independent comparators of MYTHEN III, it is possible to obtain an improvement in the maximum count rate capability of the detector at 90% efficiency from 2.9 ± 0.8 Mphotons s−1 strip−1 to 11 ± 2 Mphotons s−1 strip−1 thanks to the detection of pile-up at high photon flux. The readout chip offers additional operation modes such as pump–probe and digital on-chip interpolation. The maximum frame rate is up to 360 kHz in 8-bit mode with dead-time-free readout. The minimum detectable energy of MYTHEN III is 4.3 ± 0.3 keV with a minimum equivalent noise charge (ENC) of 121 ± 8 electrons and a threshold dispersion below 33 ± 10 eV. The energy calibration is affected by temperature by less than 0.5% °C−1. This paper presents a comprehensive overview of the MYTHEN III detector system with performance benchmarks, and highlights the improvements reached in powder diffraction experiments compared with the previous detector generation.