"Volvo Cars has designed a complete production-viable autonomous driving system," Peter Mertens, head of Volvo's research and development said in a statement.
"The key to making this unprecedented leap is a complex network of sensors, cloud-based positioning systems and intelligent braking and steering technologies."
The Chinese-owned group is locked in a race with its Japanese competitors Nissan and US internet giant Google to be the first to put fully automated cars into circulation.
"Autonomous driving will fundamentally change the way we look at driving," said Mertens, calling the venture "uncharted territory" and underlining the challenges of meeting strict safety requirements.
The group said it has developed an "autopilot" with backup systems that will continue to function safely even if certain parts stop working. It also claimed that the new car would react "faster than humans" in an emergency.
"Making this complex system 99 percent reliable is not good enough. You need to get much closer to 100 percent before you can let self-driving cars mix with other road users in real-life traffic," said Erik Coelingh, a Volvo technical specialist.
Volvo Cars plans to put 100 self-driving cars on roads around the Swedish city of Gothenburg in 2017 in a pilot initiative with Sweden's transport authority and local government.
Volvo Car Corporation is a separate entity from the Volvo Group, the maker of trucks, buses and construction machinery, since the auto company was sold to Ford in 1999. It was sold to Geely in 2010.