"So what's new?" said Jobs, who appeared at the event to a standing ovation. "It's an all-new design."
He said the new tablet will be "dramatically faster" than its predecessor.
Steve Jobs looked frail as he appeared in his signature black mock turtleneck, blue jeans and wire-rimmed glasses. Jobs announced in January that he would take a third leave of absence to focus on his health
Apple got a huge head start in the touch screen tablet race with its iPad, but in recent months its rivals have begun catching up.
Now Apple is hoping to widen its lead again.
The new version of the device will be thinner and lighter than its predecessor, down to 1.3 pounds from 1.5.
It will have front and rear-facing cameras designed for video chatting. Apple is adding its Facetime chat app to the iPad to take advantage of the cameras.
Unlike Apple's popular iPhone 4, it will be available in white as well as black.
It will have the same battery life as the current iPad, 10 hours.
It will have an HDMI port, allowing the iPad to be connected to TV screens.
"Teachers want to hook iPads up to their flatscreens in the classrooms," Jobs said. "And you can even charge the iPad while you're using it."
Like the iPhone, the iPad 2 will include a gyroscope, a feature that will enhance gaming options.
A new operating system, iOS 4.3, will roll out the same day as the iPad 2. Jobs said the system will let iPhone 4 users create Wi-Fi hotspots.
March 11
The day the iPad2 will start shipping in the US. March 25 in several other countries