Sundar Pichai, its chief executive, said the initiative was designed "to build a game platform for everyone."
Using Google's data centres, Stadia will stream games to Chrome browsers, Pixel devices and televisions equipped with Google's Chromecast dongle.
No launch date or pricing was announced but the company said Stadia will be available in the US and UK this year.
Google's presentation was not modest.
It was a comprehensive plan to overturn the game industry as we know it.
It pointedly targeted both Sony and Microsoft, saying Stadia could deliver more power than both rivals' consoles combined.
It announced not only a tech platform for video game players, but also a new set of tools for developers and its own game development division.
The subtext was barely subtext at all: mighty and powerful Google has finally turned its baleful gaze on the existing industry, and it thinks it can do better.
Google's speakers ticked off problem after problem, listing all the shibboleths that have bedevilled game developers for decades.
Playing any game on any device and almost any internet connection? Stadia will do that, Google said.
Multiplayer gaming across different devices, with no difference in performance? No problem.
At each turn, the audience let off huge cheers.
Google isn't ditching hardware altogether.
It said it was creating a new controller with a button to bring up Google's voice assistant and another to stream games directly to YouTube.
More radically, Google promised that people will be able to jump directly from a YouTube video about a game into that game itself - and even jump into live multiplayer matches.
The controller will connect directly to the service's data centres to reduce latency, which is the delay before a transfer of data begins.
"When we first met with Google, frankly, we were sceptical," said Marty Stratton, an executive producer at iD Software.
iD is one of the most venerable game developers, the creator of Doom, Quake and all their sequels.
Stratton promised that with Stadia, its new game Doom Eternal will run in 4k resolution "at an unrelenting 60 frames per second".
That is a totemic number in gaming.Google's plans are ambitious, but it isn't alone.
Several tech companies are clamouring to provide the "Netflix of games", providing streamed games and subscription services as an alternative to the traditional fixed-price hardware model.
According to new research by gaming analyst firm IHS Markit, consumer spending on cloud gaming content subscriptions reached $234m in 2018 but is forecast to grow to $1.5bn by 2023 as more tech giants enter the fray.
Apple, Amazon and Chinese technology giant Tencent are all believed to be working on their own gaming services.
Both Microsoft and Sony have confirmed they will be revealing their "next-generation" consoles.
But with Google claiming that an instance of Stadia streaming to screens remotely will be more powerful than "both current generation consoles combined", the company believes that it will be able to take on native hardware at its own game.
"Google is well positioned to build a cloud gaming business and will be able to use the audiences on its various platforms and its device reach to engage a wide number of consumers," said Piers Harding-Rolls, a gaming analyst at IHS Markit.
"But it has one key weakness - first party and exclusive content. Arguably both Microsoft and Tencent are better positioned with strengths in both infrastructure and content."
With Stadia, Google certainly made a convincing pitch as to how that disruption could be made.
Convincing, but not comprehensive. While it impressed with its dedication to the cause and innovative features, still questions loom large.
As well as lack of exclusive content, the speakers on stage pointedly avoided discussing how these games will be paid for, be it a subscription or one-off payments, or the extent of support from developers and publishers beyond iD Software and Ubisoft, whose game Assassin's Creed Odyssey was used to demonstrate Stadia's streaming capabilities.
And amid the technological bluster, the question of just how Stadia will run on spotty internet connections around the world is unlikely to be answered until it launches later this year.
Google, for all its showmanship, will know that Stadia's greatest challenges will lie outside of its control.
As such, cloud gaming may not be ready to usurp traditional gaming hardware just yet, but the clear investment in Stadia shows that technology's giants are setting their sights on transforming the world's biggest entertainment industry.
The Daily Telegraph
