The move comes amid growing alarm in Europe over the use of social media as a powerful recruiting tool, especially by the Islamic State group.
"Terrorists are abusing the Internet to spread their poisonous propaganda: that needs to stop," EU Home Affairs Commissioner Dimitris Avramopoulos said in a statement yesterday.
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"This is a new way to tackle this extremist abuse of the Internet, and it will provide the platform for expert knowledge to be shared, for quick and operational conclusions to be developed, and powerful and credible voices to challenge extremist narratives."
EU officials told AFP the launch was attended by senior representatives of Ask.Fm, Facebook, Google, Microsoft and Twitter. Europol, the European police agency in The Hague, is also involved.
EU interior ministers met in Luxembourg in October last year with delegates from Google, Facebook, Twitter and Microsoft to enlist them in the fight against online extremism.
Avramopoulos, a former Greek foreign minister, said recently the forum will aim to counter the type of propaganda that "leads foreign terrorist fighters from Europe to travel abroad to train, fight and commit atrocities in combat zones."
More than 5,000 people from Europe have gone to Syria and Iraq to join extremist groups, according to EU estimates.
Vera Jourova, the EU commissioner for justice, added, "There is growing evidence that online incitement to hatred leads to violence offline. We must step up work to limit and eradicate this phenomenon online."
But she said it was also important to strike a balance between defending freedom of expression and stopping hate speech.
Officials said talks at the EU Internet Forum will focus on how to stop jihadists from exploiting communication channels to direct their activities.
"Discussions will also focus on how to make better use of the Internet to challenge terrorist narrative and online hate speech," said a statement from the European Commission, the EU's executive arm.
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