The switch to Intel was first announced in June, when Apple said it expected to begin making the transition by the middle of 2006.
But on Tuesday, Apple CEO Steve Jobs was joined onstage by Intel CEO Paul Otellini, who was wearing a bunny suit, to make the announcement.
"With (the) Mac OS X (operating system) plus Intel's latest dual-core processor under the hood, the new iMac delivers performance that will knock our customers' socks off," said Jobs.
For years, Apple shunned Intel, which has provided chips that power a majority of the world's PCs, along with Windows software from Microsoft Corp. In the late 1990s, Apple even ran TV ads with a Pentium II glued to a snail.
But Apple, looking for faster, more energy-efficient chips, became increasingly frustrated in recent years as its chip suppliers, IBM Corp and Motorola Corp's spinoff, Freescale Semiconductor Inc, failed to meet its needs.
Of particular concern was IBM's apparent inability to develop a G5 chip that would work well in notebook computers.
"The new iMac delivers performance that will knock our customers' socks off"
Apple Chief Operating Officer
Intel, on the other hand, has been focusing on developing chips specifically tailored for notebooks.
In 2003, it launched its Centrino notebook technology with a processor that boosted a longer battery life by minimising its power demand without a major hit to performance.
During last week's International Consumer Electronics Show, Intel unveiled the latest generation, the Core Duo, which features two computing engines on a single piece of silicon.
It was that chip the Apple decided to fit into the new iMac.
The Core Duo chip's low energy requirements are expected to enable ever-smaller computers, including some built right into television sets as the industry gears its machines more towards multimedia use.