I found a yellow Rare item, and it is unidentified. How do I reveal the properties of the weapon? I tried going to Deckard Cain (as you did in the previous 2 games), but he didn't have the option of identifying my items.
As of Patch 2.0.1, the below answer is out of date.
Rare items no longer need to be identified. Legendary items still do, though. Just right click them to reveal which item you've discovered.
Just right click the item. A short cast bar animation will appear and you'll identify the item yourself, no need to go anywhere.
This is explained in-game by the small bar at the bottom of the tooltip, but its easy to miss.
Right click on it. It will identify in a few seconds.
As of patch 1.0.8, there is a new option to identify all your unidentified objects in one (long) click:
Players can now identify all items in their inventory by speaking to Deckard Cain or by using the Book of Cain that can be found near the shared stash in all Acts
Or you could go into town, in between the pub place and Cain's home is a book. Click on it and it will identify your unidentified items.