Analysts have said Apple needed to slash the multimedia gadget's price and upgrade it to work over so-called 3G, or third-generation, wireless networks to hit the company's target of selling 10 million iPhones by the end of 2008.
An 8 gigabyte model is to sell for $199 starting July 11. A 16 gigabyte model will cost $299. The devices are to roll out initially in 22 countries.
Apple has inked deals for wireless carriers in a total of 70 countries to carry the new iPhone.
AT&T Inc., the exclusive U.S. carrier for the phone, said its plans for the phone will start at $39.99 per month, plus $30 for unlimited data. That works out to be a $10 increase from the cheapest plan for the first-generation iPhone.