The lightweight tablet is just 6.1mm thin – slimmer than the average pencil – and weighs less than 500g. It is 18% slimmer than the original iPad Air and an improved chip means the device is 40% faster.
Apple has also had to upgrade the Retina screen to account for the thinner build and claims it has better and more vibrant colours. It also features anti-reflective coating.
At Apple's launch event, Tim Cook, the company's chief executive officer, said: "This is the new iPad Air 2, can you even see it?," as he held up the new device.
Phil Schiller, Apple's chief marketing officer, said two iPad Air 2 tablets stacked on top of each other would still be slimmer than the original iPad.
Forrester analyst Thomas Husson noted the importance of including Apple's new mobile payment service, Apple Pay, on the new device.
He said: "With a significant installed base, a high usage, a premium experience and now a better online payment offering, iPad devices will simply continue to offer huge opportunities for brands," he said.
In terms of prospective success, other observers noted that Apple faces a tougher market in the coming year, with a predicted slowdown in tablet sales through 2014.
According to Gartner figures released this week, tablet sales will rise 11% in 2014. That compares starkly with 55% growth in 2013.
iPad much as expected. Thinner, speed bump, fingerprint scanner. Focus on better camera is interesting - is that a selling point?— Benedict Evans (@BenedictEvans) October 16, 2014
IDC's research director Francisco Jeronimo pointed out that Apple has done well in terms of tablet sales compared with its rivals. The company has sold 225m iPads to date.
#Apple sold twice as many iPads to date than the other 4 largest tablet vendors combined! Impressive!— Francisco Jeronimo (@fjeronimo) October 16, 2014
As with the iPad Air, the device boasts up to 10 hours of battery life. The iPad Air 2 also comes with Touch ID, Apple's fingerprint reading system, and will be compatible with the upcoming Apple Pay mobile payments service.
The iPad Air 2 will be available for pre-order on 17 October starting from $499.
Apple also announced the third-generation iPad mini, an incremental update on the iPad mini 2, with Retina display and Touch ID.
The device is also available to pre-order from 17 October starting at $399. Both devices will be available in silver, grey and gold.
The company announced that Apple Pay will be available in the US from 20 October. It isn't clear when the service might hit the UK, but analysts have suggested the new service could bring mobile payments into the mainstream.
Apple Pay will be available on the new iPhone 6, iPhone 6 Plus and the iPad Air 2 – though the latter will not have NFC capabilities.
The latest update to Apple's mobile operating system, iOS 8.1 will also be available from 20 October.
Other releases include a new iMac and Mac Mini desktop computer.