At a launch event today in New York, Amazon founder Jeff Bezos officially unveiled the Kindle Fire, boasting a seven-inch colour screen and weighing 14.6 ounces.
The touchscreen tablet runs a customised version of Google's Android operating system and links to Amazon's established app store for accessing movies, TV shows, songs and books.
It will cost $199 (£127), under half the $499 price of the cheapest iPad, although Apple's device boasts a larger 9.7-inch screen. The Kindle Fire also does not have a camera or mobile web access.
However, the device's low price point makes it a serious challenger to Apple's tablet dominance, coupled with Amazon's ability to heavily market the product on its popular website.
The Kindle Fire will link to the Amazon Cloud Player, the remote storage solution launched by Amazon in the US earlier in the year.
It also uses a new web browser called Amazon Silk, designed to "extend the boundaries of the browser" by coupling the capabilities of local devices "with the massive computing power, memory, and network connectivity" of the Amazon Cloud.
Watch a video explaining how Amazon Silk works below:
Launching in the US on November 15, the Kindle Fire comes with a 30-day free trial of Amazon Prime, the premium membership service that offers users free delivery of goods bought on Amazon.
No plans have been confirmed as yet for a UK release, but should the Kindle launch model be followed then it is expected that the Kindle Fire will hit British stores in early 2012.
Expectations are already high for the Kindle Fire, with Forrester research estimating that it will sell between 3m and 5m units in its first year. Amazon's share price jumped 3% in trading earlier today ahead of the product's announcement.
Also at the event, Amazon announced the Kindle Touch, a new e-reader featuring a black and white touchscreen. Priced at $99, the product will have electronic ink for reading in bright light and free storage in Amazon's cloud service.
A 3G model of the Kindle Touch will cost $149, and both products will launch in the US on November 21.
Amazon also plans to launch a cut-price non-touch Kindle for $79, presumably in response to the success of Barnes & Noble's Nook device in the US and the planned UK launch of an e-reader from retail chain Waterstones next year.
Even before the Amazon Kindle Fire was officially unveiled, it had been reported that the company would launch a second version of the tablet in the first quarter of 2012.
Should the rumour prove accurate, it would appear to relegate the debut Kindle Fire model to merely a stopgap product before the firm genuinely tries to challenge the iPad next year.