People using the Facebook app will be "occasionally notified" when friends are nearby - but only if they turn on the opt-in feature.
Users can decide which of their friend group can see if they are nearby, such as close friends, work colleagues or a specific friends list.
The app will alert users when friends are nearby
The tool uses the geolocation technology in smartphones, and can be turned on and off at any time.
An initial alert tells you how far away your nearby friends are, but does not give their exact location or co-ordinates.
You can then choose to share your exact location with any of the nearby users, who will then see where you are on a map.
Users can then choose to share their exact location
In a news release, Facebook stressed the feature was optional and the user always retained control.
Product manager Andrea Vaccari said: "Sharing your location with Nearby Friends goes two ways - you and your friends both have to turn on Nearby Friends and choose to share with each other to see when you’re nearby.
"Your friends will only be able to see that you’re nearby if you share this info with them and vice versa."
Facebook has reportedly been testing the feature with the "vast majority" of the company's 6,500-plus staff, according to technology site Mashable.