The 150 Volkswagen taxis are the first wave of about 1,500 cars that will be introduced to the crowded city where thousands of cabs produce clouds of noxious exhaust fumes.
Tailored for tourists, the bright yellow taxis have air conditioning, electronic meters and credit card readers.
They will be on call at 36 locations with trained drivers, who will be banned from smoking during working hours.
Abdul Kader Ismail , the city official in charge of the project, said on Wednesday: "This is a sign of civilisation. This will permit us to reduce pollution and open new opportunities for the unemployed and to stimulate the car market."
Khaled al-Alamy, the proprietor of the firm that owns the taxis, also promised eventually to make women drivers a third of his staff.
The typical Cairo taxi is 10 years old, has cracked windows and a broken meter.
Cairo city council introduced a plan to upgrade its 80,000-strong taxi fleet five years ago.