The "support function", which works by using radar and camera technology to watch out for vehicles and pedestrians ahead of the car, is designed to save lives on urban streets, said the company.
The system kicks in at speeds of up to 35kmph, although the technology "is active at all speeds", according to Volvo.
In case a collision is imminent, the system sends an audio warning to alert the driver, and if there is no response the car is immediately brought to an emergency stop, the Daily Mail reported.
However, the technology that "is active at all speeds" doesn`t work at night or in poor weather.
But Volvo pointed out that "it is always the driver that is responsible for driving safely".
Fourteen per cent of all those killed in car accidents in Europe are pedestrians; this figure stands at 11 per cent in the US.
Volvo estimates that its detection system would reduce the number of pedestrians killed by more than 20 per cent, while the number of those seriously injured would fall by almost 30 per cent.
In a further 30 per cent of incidents, a collision would be entirely avoided, Volvo said.
The collision warning system is also programmed to react if the vehicle in front is at a standstill or is moving in the same direction.
The system is an optional extra in the Volvo XC60, S60 and V60.