The software also lets parents set volume limits on children's iPods and lock settings with coded combinations on the latest models.
The software release comes in the wake of legal action taken against Apple in a Silicon Valley court on behalf of those who claim to have developed "iPod ear" - loss of hearing due to the device.
Greg Joswiak, Apple's vice-president of worldwide iPod marketing, said: "With the increased attention in this area, we want to offer customers an easy to use option to set their own personal volume limit."
Steve Berman, a lawyer for the plaintiffs in the Silicon Valley case, said Apple had done "next to nothing" to inform consumers about potential hearing damage.
"It is good to know that Apple finally acknowledges that there is a serious flaw with its iPod product, and is giving US purchasers the same protection it has been giving French purchasers since 2002," he said.
"Unfortunately, this patch doesn't help the millions of people who own older models. It is a jack-legged workaround that falls well short of what consumers demand and deserve."
Apple pulled devices from stores in France after the country imposed a limit of 100 decibels for personal listening devices, according to the legal action.
The company was able to resume selling iPods there after modifying software to limit the volume, but did not offer similar safeguards in the United States, Berman said.
Air raid sirens
Apple devices can reach decibel levels in the range of 115 DB, considered on par with chainsaws, jack hammers and air raid sirens, according to documents submitted to the court.
Studies indicate that hearing loss may occur after 28 seconds of sound at such levels, the plaintiffs claim.
The documents charge that iPods are "inherently defective in design" and do not bear adequate warnings about possible hearing damage.
The plaintiffs also say that "ear bud" earphones sold with iPods do not properly disperse the sound.