The device runs apps, acts as a health and fitness tracker and communicates with the iPhone.
Although many companies already sell competing products, experts note that Apple has a history of entering sectors relatively late and then changing their direction with influential devices of its own.
Apple also unveiled two new handsets that are larger than previous models.
The iPhone 6's screen measures 4.7in (11.9cm) and iPhone Plus 5.5in (14.0cm) - a change that analysts said should help it prevent users migrating to Android.
It also announced a new service called Apple Pay, which chief executive Tim Cook said he hoped would "replace the wallet" in shops.
Watch apps
The Apple Watch is controlled by what Apple calls a "digital crown" - a dial on its side that allows content on its screen to be magnified or otherwise changed, and also be pressed inwards to act as a home button.
The display is a touchscreen that can detect the difference between a light tap and heavier pressure from the user's fingers. In addition, the device runs Siri - Apple's voice-controlled "personal assistant".
It offers a variety of different watchfaces, can alert the user to notifications, act as a heart rate monitor and show maps.
Apple said that apps could also be processed on an iPhone, but displayed on the watch in order to extend battery life.
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