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.
Apple plans record initial production of new iPhones
After Foxconn, Taiwan's Quanta weighs making in India
US tech industry appeals to Obama to keep hands off encryption
Apple muscles into streaming music market
Apple to offer mobile payments service in UK in July