Announced by Apple CEO Tim Cook earlier today, the 4-inch iPhone SE has the same processing chip as the 4.7-inch iPhone 6s.
It also features the same 12‑megapixel iSight camera, and comes in the same four colour options: gold, silver, space grey and rose gold.
The iPhone 6 and 6 Plus devices – Apple's largest models to date – were criticised after they launched in September 2014 as owners complained that they bent under pressure.
The newer 6s versions were released a year later, designed to be more robust and including 3D Touch sensor technology that interprets pressure applied to the screen – a feature not included in the iPhone SE.
In December, Apple announced it was releasing a rechargeable battery case to help extend the life of the iPhone 6 battery.
The SE will be ready to order as 16GB and 64GB versions in the US from 24 March 2016, and available from 31 March 2016, for $399 (£277).
Smaller was a continuing theme at Apple's event in Cupertino, California, where the tech company also unveiled a downsized version of the iPad Pro that will replace the iPad Air 2.
The more compact edition supports accessories, such as the iPad Pro keyboard and the Apple Pencil for technical drawing.
Another announcement was the iOS 9.3 software upgrade, which includes a CareKit for patients to use their iPhones as part of their healthcare.
Apple's famous product launch presentations were recently spoofed by British comic Sacha Baron Cohen when promoting his new film.