The racing game will take advantage of the smartphone's new A6 processor and widescreen display for visuals that EA's Rob Murray described as "full console quality".
As an example of how the hardware will be used, the game can now feature a driver's seat view with real-time reflections for the rear-view mirror, allowing racers to see incoming cars behind them.
For multiplayer, Real Racing 3 will use Game Centre for "time-shifted" multiplayer, allowing players to race against their friend's recorded times and ghost data.
Apple also announced that the new iPod Touch will have a new A5 processor, enabling seven times the graphics speed of current models. To demonstrate the iPod Touch Apple showed the virtual toy app Clumsy Ninja, where players poke and prod to interact with a tiny on-screen ninja.
Watch the trailer for Real Racing 3 below:
Photo gallery - Apple's iPhone 5 in pictures: