Apple said the new display will be sharper than the high-definition television set in the living room. The company says it will show more saturated colors than previous models.
The company said the iPad is powered by a new chip with four processing cores, for smoother graphics.
At the launch event in San Francisco, Apple Inc. CEO Tim Cook said, "We are taking it to a whole new level and are redefining the category that Apple created with the original iPad."
Earlier, Cook spoke of a "post-PC" era dominated by the iPad and other Apple products.
Prices aren't changing from the previous models. They will start at $499. Versions capable of accessing cellular networks will cost $629 to $829.
The new iPad model will go on sale March 16 in the U.S.
Compared to the iPad 2, the new model features a higher-resolution camera on the back, comparable to the one in the iPhone 4S.
Apple also confirmed that the new model will come in a version that can use Verizon Wireless' and AT&T Inc.'s "LTE" wireless broadband networks. The offer speeds that are faster than the "3G" networks used by previous iPads, and current iPhones.
Apple also said it would start letting users store movies in its iCloud remote storage service, so they can be accessed through the Internet by PCs and Apple devices. It already lets users store photos, music and documents in the service.
Apple is also upgrading its Apple TV set-top box so it can play movies in 1080p, the highest-resolution commonly used video standard.
Peter Svensson reported from New York.