The new software is based on open Web standards and is capable of operating on devices with much lower hardware requirements than today's existing crop of smart phones, according to Mozilla.
Because the Firefox OS is open-source and Web-based, third-party developers will be free to sell mobile applications without needing to share revenue with Apple or Google.
"There's a strategic imperative for the industry to have another OS that really is open and supports choice and competition," said Mozilla's senior vice president of products, Jay Sullivan.
Mozilla will showcase some of the first hardware devices based on that software at the Mobile World Congress, taking place in Barcelona this week. Among the brands that have signed on to make devices based on Firefox OS are South Korea's LG, China's ZTE, and Huawei.
Unlike Google and Apple's operating systems, which are built from proprietary technology, Firefox OS uses the HTML5 standard with which Web services are built. That means anyone familiar with Web programming can create Firefox OS apps.