"Our mission is to make the world more open," said CEO Mark Zuckerberg at the event which was hosted at the Facebook headquarters in Menlo Park, Calif.
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Facebook's stock took a hit on the news, while the search giant Google's (NASDAQ: GOOG) stock got a bump. Yelp's (NYSE: YELP) stock also fell on the announcement.
(Read More: Facebook News Likely More Sizzle than Steak: Pro )
The new feature is called Graph Search and is a social search tool, not a global web search engine like Google (NASDAQ: GOOG) , that will allow users to search Facebook's social graph. However, users can only search content that has already been shared with them.
"You can only search content that has been shared with you," Zuckerberg said.
The new feature delivers information with exact answers, Zuckerberg said. For example, if a user searches for friends who live in San Francisco, it will deliver only friends that fit that search.
Hinting at a possible move into the global search business, Zuckerberg said that while the Graph search currently only focuses on people, places, photos and interests, there will be more additions in the future.
Taking a cue from Google, the social network also plans to implement auto-complete search results, where the search engine will try and guess what the user is searching before the entire search is finished being typed.
Graph Search is currently in beta, however, the new feature will eventually appear at the top of each page as a larger search bar.
Facebook users who want to sign up for the waiting list for the beta version of Graph Search can do so on Facebook's website .