Sky Mobile will focus on mobile data, with customers able to roll over unused data at the end of the month and to change their allowance whenever they like.
Lyssa McGowan, head of Sky Mobile, told Sky News: "There are definitely lots of competitors in the market already but it's a huge market and we think that, by offering something so different that's really in tune with what people need - the need to manage and control their data, not to be hit by unexpected bills - the need to get what you pay for really."
The service will be available to 46,000 people who pre-registered their interest and roll out to the public in the new year.
Sky says the UK mobile market is worth £15bn.
According to Enders Analysis, EE is the biggest operator, with a 31% market share, followed by O2 (29%), Vodafone (25%), Three (12%) and Virgin (3%).
It puts Sky into even closer competition with BT Group, which owns EE.
The two companies already compete in broadband and home phones and BT has made a big push into television with BT Sport.
Earlier this year, the European Commission blocked a proposed merger between O2 and Three over competition concerns.
James Barford, head of telecoms research at Enders Analysis, told Sky News: "Sky is quite late to the market and the market is pretty tight - people don't move operators very often, churn is pretty low and a lot of contract mobile subscribers spend a lot of time in contract, so you have to pick the time to grab new customers.
"If they are to build a substantial base, it would take them a number of years."
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