Using Apple's CarPlay software, drivers will be able to use Apple Maps as in-car navigation, as well as listen to music and watch films. Additionally, calls can be made through CarPlay, which will be controlled by the Siri voice recognition platform. It's the first time Apple has developed software explicitly for use in cars.
The system was unveiled at this week's Geneva Motor Show, held annually in the Swiss city.
When users connect their iPhone 5, 5c, or 5s via a USB cable, apps found on the phone appear on the vehicle's inbuilt screens. The phone can then be controlled through the car's controls instead of the phone's. Apple believe it will make cars smarter and safer to drive.
"CarPlay has been designed from the ground up to provide drivers with an incredible experience using their iPhone in the car," said Greg Joswiak, vice president of iPhone and iOS product marketing at Apple.
CarPlay accesses recent destinations looked up on your iPhone, as well as those mentioned in emails and text messages. From there, it can anticipate where you'd like to go, and then provide turn-by-turn directions, live traffic information and estimated time of arrival.
"iPhone users always want their content at their fingertips and CarPlay lets drivers use their iPhone in the car with minimised distraction," continued Joswiak.
With its messaging service, texts will be read out via Siri, allowing the driver to reply using voice commands.
Car buyers are expected to be able to purchase vehicles equipped with Apple's software later this year. The system will be compatible with new cars from Mercedes, Volvo and Ferrari. Honda, Hyundai and Jaguar are expected to add CarPlay-enabled cars to their ranges.
The move means developers will be able to build apps specifically for use in cars. A select number of third-party apps including Spotify, iHeartRadio and Beats Radio will be made available for the product's launch.
The announcement by Apple brings them into direct competition with Google in the race to become the industry standard for in-car software systems. The search engine giant launched its own purpose-built Android-based car system initiative earlier this year called the Open Automotive Alliance (OAA).