The firm showcased the engine in an impressive three-minute Final Fantasy video during a press conference at the E3 Gaming Expo.
The tech demo is running in real time and not made up of pre-rendered footage, reports Game Informer.
Presented by Square Enix's chief technology officer Yoshihisa Hashimoto, the video is titled 'Agni's Philosophy - Final Fantasy Real Time Tech Demo', hinting at the future of the series.
Earlier this week, LucasArts released a gameplay demo for Star Wars 1313, which is believed to be running on the Unreal Engine 4.
The E3 Expo is taking place in Los Angeles until June 7.
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Watch the Star Wars 1313 gameplay demo below: