The six-metre (20 feet) tall scale recreation of the Triumphal Arch is made of Egyptian marble and was carved in the northern Italian region of Tuscany using precision digital technology such as 3D modelling.
The project is the brainchild of the Oxford-based Institute of Digital Technology (IDA), a joint venture between a group of international academics.
"If something can be rebuilt in this fashion, then those images of things being blown up and destroyed forever, that's undercut," IDA director Roger Michel told AFP after the replica was revealed in front of a crowd of several hundred people.
Palmyra, a UNESCO World Heritage Site northeast of Damascus known as the "Pearl of the Desert", was taken back by the Russian-backed Syrian army from IS fighters last month.
The city was a major tourist destination before the Syrian conflict erupted in 2011, known for its ancient ruins, colonnaded streets and 2,000-year-old temples.
IS seized Palmyra last year and beheaded its 82-year-old former antiquities chief three months later.
The jihadists destroyed some of the city's most striking monuments and used the ancient amphitheatre as a venue for public executions.
Experts are divided on whether the ancient ruins can be restored.
Syria's antiquities chief Maamoun Abdulkarim has said the job could be done in five years but Annie Sartre-Fauriat, a member of a UNESCO group of Syrian heritage experts has voiced doubts.
Abdulkarim repeated his appeal for international assistance for the restoration at Tuesday's event in London and suggested that the replica arch could go on display in the modern city of Palmyra.
London Mayor Boris Johnson, who spoke at the unveiling ceremony, told the crowd that they were "here in a spirit of defiance of the barbarians who destroyed the original".
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