It will allow apps such as maps, music and calls running under iOS on the driver's iPhone to run on the car dashboard.
Car makers such as Mercedes-Benz and Volvo demonstrated the touch control user interface at the Geneva Motor Show this week.
"CarPlay lets drivers use their iPhone in the car with minimised distraction. We have an amazing lineup of auto partners rolling out CarPlay," said Greg Joswiak, Apple's vice president of iPhone and iOS Product Marketing.
Once iPhone is connected to a vehicle with CarPlay integration, Siri voice-activation is used to access contacts, make calls or listen to voicemails.
"When incoming messages or notifications arrive, Siri provides an eyes-free experience by responding to requests through voice commands, by reading drivers' messages and letting them dictate responses or simply make a call," said Apple.
Similarly iPhone maps apps and iTunes music library will be displayed on the dashboard. It also supports select third-party audio apps including Spotify.
Apple says CarPlay is available as an update to iOS 7 and works with Lightning-enabled iPhones, including iPhone 5S, iPhone 5C and iPhone 5.
It will be available in select cars shipping later this year.
