Epic Games president Mike Capps took the stage at Apple's live event today to announce "Project Sword" (codename), an Unreal Engine 3 powered game for iPhone, iPod Touch and iPad due later this year. Based in a medieval setting, it's a sword fighting game focused on 1-on-1 battles and it looks amazing. To quote Steve Jobs following the announcement: "It's on a phone ... !"

Project Sword is being developed by Chair Entertainment, which was responsible for the XBLA hit Shadow Complex. It will support multiplayer and achievements via Apple's Game Center infrastructure. We'll have more details on the game as we get 'em.

Update: Cliff Bleszinski has tweeted that a playable demo of the castle environment featured in the Project Sword demonstration is now available on iTunes for iPhone/iPad/iPod Touch. Grab it here.

This article was originally published on Joystiq.