The iPhone 6 looks near-identical to the designs leaked in a Youtube video last week.
Apple CEO Tim Cook called the launch "the biggest advancement in the history of the iPhone today" during today's presentation, taking place at the Flint Centre for the Performing Arts.
The device comes in two sizes: the iPhone 6 has a 4.7-inch screen and is 6.9 millimetres thick, while the iPhone 6 Plus has a 5.5-inch screen and measures 7.1 millimetres thick.
Both are significantly bigger than the iPhone 5, which launched at a similar event in September 2012.
iPhone 6 is up to 50 percent faster than the previous model and will offer wifi up to three times faster than before. The 6 Plus will be able to play games in a higher resolution to most upcoming games consoles, according to the company.
The M8 chip has been improved so the phone can detect activities such as climbing stairs, which opens opportunities for fitness apps. For example in the new Nike+ app, users will be able to track the incline of their run as well as speed and route.
The eight-megapixel camera will include updates including iSight sensors, "focus pixels" similar to those found in DSLR cameras, and 43-megapixel panoramas. Slow-motion video capability goes to 240 frames per second (fps), rather than 120fps on the iPhone 5s.
The 6 Plus integrates "optical image stabilisation". The lens moves side to side and up and down within the case, which takes data from the gyroscope and barometer to stabilise the picture.
It comes in three colours: silver, black and "space grey" – which looks like pale gold.
"These are the best phones ever made," said Phil Schiller, senior vice president of worldwide marketing at Apple.
It will be available in the US, Canada, UK, France, Germany, Australia, Hong Kong, Singapore and Japan from 19 September and cost from $299. Pre-orders will be taken from 12 September.