The new iPod features an 8 megapixel iSight camera, FaceTime high-definition camera and also houses Apple-designed A8 chip, which is used in iPhone 6.
The iPod, which will give access to Apple Music, also features fitness tracking M8 motion co-processor.
Apple said the new iPod will go on sale from today and cost $199 for a 16GB model, $249 for 32GB and $299 for 64GB.
The company also launched for the first time a 128GB model for $399.