The new offering, unveiled at Google I/O, is called Google Play Music All Access and allows users to stream any song in the Google catalogue on Android smartphones and tablets.
The service, like Spotify, will cost $9.99 a month in the United States, but UK pricing and availability has not been officially confirmed yet.
Google is kindly offering everyone a 30-day trial of the service and if users sign up before June 30th they'll get a preferential subscription rate of $7.99 a month.
Like the new Twitter #Music service, Google is looking to guide users to music that they will love, but aren't yet familiar with.
There's a recommendations engine that's linked to your listening habits, as well as automatic algorithms and specially compiled playlists for your tastes.
There's also a host of genres and sub-genres for users to select from, which will offer recommendations and essential albums to allow users to discover new music.
The service will combine tracks that users have stored locally on their device as well as those available for streaming in just one searchable engine, making it easier to access music you already own and music you wish to stream at the same time.
During the announcement the company also debuted an intuitive UI which allows users to swipe away tracks they do not wish to listen to from their listening queue, a feature that Spotify and Rdio are yet to implement within their mobile apps.
The launch follows reports earlier this week that Google had finally agreed deals with all of the major labels, which enabled them to unveil the new subscription service at the Google I/O event tonight.
It also beats Apple's long-rumoured iRadio streaming service to launch.
Google is yet to announce its plans for the international roll-out, but said it would be launching in more countries beyond the US soon.