The REDengine 3, which is the studio's third iteration of its in-house technology, has been introduced via an image of a beach and surrounding countryside.
Designed for expansive role-playing games, the engine will blur the line between pre-rendered CGI movies and real-time rendered graphics, according to CD Projekt.
"If we look at RPGs nowadays we find two approaches, one which emphasizes the story but limits the game world, and one that builds a vast, open world but hampers and simplifies the story," explained CD Projekt's Adam Badowski.
"With the REDengine 3 we combine the positive aspects of both approaches for the first time, creating an open environment with a complex, multi-thread story.
"Together with believable characters, a captivating tale and a world where players can roam freely without loading times, we will be able to move gaming to a new level with a realistic feel and full player immersion.
"When working on our previous titles, I didn't dream that we would achieve something like this. Thanks to the support of all our fans, now we have the possibility to use REDengine 3 and create something many RPG fans dream of," he added.
The brand new game engine allows for movie-quality face and body animations, features a high-performance terrain system, enhanced lighting and cinematic post-processing effects.
It will be used in upcoming titles Cyberpunk 2077 and The Witcher 3, the latter of which is expected to be unveiled on February 5.
The news comes after the studio released a teaser trailer for Cyberpunk 2077.
Cyberpunk 2077 will be a sandbox open-world game taking place in the futuristic Night City.
Inspired by the Cyberpunk 2020 pen-and-paper game, the video game will be set further in the future to allow CD Projekt the freedom to build on the setting with unique technological advances and cybernetics.
No platforms have been confirmed for Cyberpunk 2077, which will release "when it's ready".
Watch a Cyberpunk 2077 teaser trailer below: