The phone, which was launched on Wednesday night (India time) at the Yerba Buena Center for the Arts in San Francisco, has a glass and aluminium body that is 18 per cent thinner and 20 per cent lighter than iPhone 4S, it sports a 4-inch "retina" display and can surf a high-speed 4G LTE wireless network.
The California-based company has called the iPhone 5 "the thinnest smartphone in the world".
Kicking off the packed launch event, Apple CEO Tim Cook called the launch "the biggest thing to happen to iPhone since the iPhone".
It is expected to go on sale on September 21 in the United States, Australia, Canada, France, Germany, Hong Kong, Japan, Singapore and Britain. It will hit 100 countries by year's end in the fastest international rollout for an iPhone so far.
The iPhone 5 comes with Apple's newest "A6" processor, which executives said runs twice as fast as the previous generation. It will pack three microphones - enhancing built-in voice assistant Siri - and an 8
megapixel camera that can take panoramic views.
The company says one popular enhancement was improved battery endurance - the new iPhone can support eight hours of 4G Web browsing.
Cook said Apple's apps store now has more than 700,000 on tap - the industry's largest library.
"When you look at each of these, they are incredible industry-leading innovations by themselves. But what sets them apart, and what places Apple way out in front of the competition, is how they work so well together," he said.
Upgrades to the software include voice navigation for driving, a feature already available on many Android smartphones, as well as "Passbook" for storing electronic boarding passes, sports tickets and gift cards, according to Reuters.
Siri has been improved. In an onstage demonstration, Siri was able to answer questions about the result of a recent pro football game and recite a list of movies playing around town, along with ratings, it said.