"We believe the company to be extremely undervalued," Icahn said Tuesday.
Apple stock spiked more than 4 percent on the announcement. (Click here for the latest Apple quote (AAPL))
While Apple is now up over $100 from its 52-week low of $385.10 hit on April 19, it remains down about 8 percent for the year.
Icahn said he spoke with Apple CEO Tim Cook about the company launching a larger buyback and that the two plan to speak again.
(Read more: Oracle's Ellison: Google's Page actions 'evil' )
In a statement, Apple said, "We appreciate the interest and investment of all our shareholders. Tim had a very positive conversation with Mr. Icahn today."
Icahn's stake in Apple comes after Oracle CEO Larry Ellison told Charlie Rose on CBS that without Steve Jobs the company would not be nearly so successful.
On Monday, Icahn hinted on the Icahn Enterprises website that he would be using Twitter to make a major announcement.
Icahn's activities have been in the news frequently in recent months.
He has been in a very public battle over nutritional supplement maker Herbalife (HLF) with Pershing Square's William Ackman. He is also spearheading an effort to wrest control of Dell (DELL) from founder Michael Dell and keep the company from being taken private.
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