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The only official channel to obtain third-party applications for the iPod Touch is Apple's iTunes Store. The App Store application, available in all versions of the iPhone OS from version 2.0 (or Software Update 2.0) onwards, allows users to browse and download applications from an online repository with the iTunes Store. To develop such software, a software development kit (SDK) was officially announced on March 6, 2008, at an Apple Town Hall meeting. The interface is based around the home screen, a graphical list of available applications. iPhone apps normally run one at a time, although most functionality is still available when making a call or listening to music.

The iPod Touch has the iPhone's multi-touch interface, with a physical home button off the touch screen. The home screen has a list of buttons for the available applications. The iPod Touch is equipped with Wi-Fi 802.11b/g. This is attributed to the increased processor speeds in the second generation iPod Touch, though Fessler speculates that other factors may have contributed to it.

Shortly after the iPod Touch was released (iPhone OS version 1.1.1), hackers were able to "jailbreak" the device through a TIFF exploit. The resulting application, "Installer.app", enabled the user to download a selection of unofficial third-party programs. Some of these give the user more control over the iPod Touch than is officially available, and also makes it work on Linux operating systems. Also, the first generation iPod Touch works with all "Made for iPod" peripherals, but Apple made changes to the second generation iPod Touch that prevent some existing peripherals from recharging the updated player.