Apple also worked with app developers to create new functionality. You'll be able to unlock room doors at Starwood hotels or remind yourself where you parked your car with a BMW app.
Apple Watch is the company's first-ever wearable device. The new watch will come in a variety of styles and straps, with a choice of two sizes.
It will be available early next year at a starting price of $349.
The new iPhone 6 has a thickness of 6.8mm thin, while the 5.5-inch iPhone 6 Plus is 7.1mm thick.
Apple's new iPhone 6 and iPhone 6 Plus are powered by the 64-bit Apple A8 chip.
The new iPhones are the thinnest and biggest iPhones yet.
Apple announces three models of the Watch - Apple Watch, Apple Watch Sport, Apple Watch Edition.
The 5.5-inch Apple iPhone 6 Plus is claimed to offer 24 hours of talk time on 3G.
CEO Tim Cook says Apple had to invent a new interface for the watch because simply shrinking a phone wouldn't work.
The resolution on the camera of the new iPhones is staying at 8 megapixels, while rival Android and Windows phones have been boosting that. The S5, for instance, is at 16 megapixels. However, the megapixel count is not only one factor in what makes a good photo. Apple says it is putting in new sensors for better shots.
The new phones will start shipping in the US on September 19, with advance orders to begin this Friday (September 12). Starting prices will be comparable to those in the past - $199 with a two-year contract for the iPhone 6 with 16GB of storage.
However, the step-up models will have double the memory than before - $299 for 64 gigabytes and $399 for 128 gigabytes. The iPhone 6 Plus phones will cost $100 more at each configuration.
The Apple Watch will require one of the new iPhones or an iPhone 5, 5s or 5c.
The screen resolution on the iPhone 6 Plus will be sharper than previous iPhones, at 401 pixels per inch rather than 326.
Apple says the new iPhone 6 and iPhone 6 Plus will be faster and have better battery life than previous versions.
Apple Pay combines the convenience and security of Touch ID and Passbook with NFC technology. So you can use iPhone 6 to pay in stores and within apps with a single touch. Apple Pay is Apple's new mobile payments service.
Much of the interaction would be through the dial on the watch, which Apple calls the digital crown. You use that to zoom in and out of a map, for instance, so you're not blocking the screen, which would have occurred if you were pinching in and out to zoom.
It's the first new product to be developed and introduced under Chief Executive Officer Tim Cook's reign, the next chapter in Apple's history.
Apple unveiled the Apple Watch alongside two new iPhones - iPhone 6 and iPhone 6 Plus - with sharper and larger displays, calling the wearable device the next chapter in its history.