Chief Executive Tim Cook, who took over from the company's late co-founder Steve Jobs last year, faces pressure to keep Apple at the forefront of the industry.
The iPhone 5 sports a 10cm "retina" display, ability to surf a high-speed 4G LTE wireless network, and is 20% lighter than the previous iPhone 4S.
The latest iPhone comes as Apple tries to fend off strong competition.
Google’s Android has become the most-used mobile operating system in the world, while key supplier and rival Samsung Electronics has taken the lead in smartphone sales.
Microsoft is also pushing its Windows Phone 8 operating system as a third alternative to Apple and Google's.
Rivals have been first to market with phones that have bigger displays or run on faster wireless networks.
The iPhone 5 comes with Apple's newest "A6" processor, which executives claimed runs twice as fast as the previous generation.
It will have three microphones and a better eight megapixel camera that can take pictures on higher resolutions.
Apple has sold more than 243m iPhones since its 2007 arrival, after which the device proceeded to upend the industry.
Mr Cook told the audience that its Apps Store now has more than 700,000 apps available, which is the industry's largest library.
"Don Andrea" - Keeps up to date with breaking news, stories from around the World, including headlines from the hip hop and entertainment world.