A hand-held diagnostic tool is designed to operate and easily upgrade software applications developed for automotive diagnostics. The diagnostic tool, which communicates with a plurality of motor vehicle control units, provides application upgrades and/or modifications and/or new algorithms that are developed/adapted via remote updating. The tool comprises full diagnostic capability capable of receiving diagnostic data from a motor vehicle for storage, analysis and/or further data transfer to a remote device. The tool may further comprise wireless capability to perform data transfer operations. Remote updating is accomplished through a number of external ports on the tool that facilitate modem, Ethernet and wireless communications, including point-to-point protocol connection to the Internet.