The device, which was announced at watch fair Baselworld on Thursday, will be unveiled at the "end of the year", Jean-Claude Biver, CEO of Tag Heuer said, but would not give details about pricing or what the watch would look like.
But Biver looked to distance comparisons between Tag Heuer and the U.S. technology giant: "The difference between the Apple Watch and the Tag Heuer watch is very important. One is called Apple and one is called Tag Heuer," the CEO said at a press conference.
Global smartwatch shipments are set to explode this year, growing 511 percent from 4.6 million units in 2014 to 28.1 million units in 2015, with Apple expected to have 55 percent of the worldwide market share, according to Strategy Analytics.
Biver told CNBC at Baselworld earlier in the week that the $10,000 Apple Watch Edition cannot be compared to similarly priced Swiss timepieces. But analysts said the Tag Heuer move highlights that traditional luxury watchmakers can't ignore the hype.
"I think with Apple Watch hitting the markets, the Swiss watchmakers can't bury their head in the sand anymore," Ben Wood, chief of research at CCS Insight, told CNBC.
"Tag's decision to partner with a tech company will be the first of many deals to come."
A number of Swiss watchmakers have jumped into the smartwatch market. Swatch and Breitling are among those battling to be the hottest wrist wearable. And several other fashion brands are jumping in too. Earlier this year retailer Guess unveiled a smartwatch in partnership with Martian Watches, and at Baselworld, pop megastar Will.I.Am announced a smartband with Gucci.
"Swiss made" is normally engraved into Swiss Watches, but Biver revealed that the smartwatch would not legally be allowed to display this. To have the label, the watch's inner movement or "engine" must be produced in Switzerland. But the Tag Heuer watch would be powered by Google's Android and Intel parts.
Biver said 80 percent of the new watch would be made in Switzerland, but the lack of the "Swiss made" label would not put consumers off. He said that the watch would have "Made in Switzerland" on it and "everybody understands what it means".
"We know how to produce movements…but the microchips and the software is not really our specialty and because of that we should be associate with the two strongest giants in technology," told CNBC in a TV interview after the press conference.