The third edition of Cosmic Encounter was published by Avalon Hill in 2000. Its production value was much higher than that of the two previous editions: it included stackable plastic ships instead of flat cardboard tokens, a large plastic "mothership" and "carriers" that players loaded their ships into instead of placing them on a flat hyperspace gate board and full-color illustrations on the boards and alien power cards. However, it was much simpler than its predecessors, as it included only 20 aliens (none of which were new) and no flares, only supported up to four players and received no expansions, and for this reason is considered by fans to be the weakest iteration of the game in terms of content.
This edition is notable for making changes to many of the game terms that would end up being carried forward through to the current edition: e.g., "tokens" became "ships" and "bases" became "colonies." For a full list of terminology changes, see Terminology.