Liberia's new leader, Gyude Bryant, has promised a fresh start and an end to 14 years of conflict.
Liberians are desperate for peace
"My people, the war is over," he said after taking the oath of office while holding the Bible.
He becomes chairman of a new power-sharing government which includes two rebel groups, civilian political parties and loyalists of former President Charles Taylor.
The ceremony was attended by West African leaders, heavily guarded rebels and government officials.
"If there's no peace in Liberia, there's no peace in West Africa," said President Olusegun Obasanjo of Nigeria, which has contributed the bulk of the 4,000 peacekeeping troops in Liberia.
These troops are under the command of the United Nations, which says it will increase their numbers to 15,000, making it the largest peacekeeping operation in the world.
Mr Bryant's inauguration speech was met with cheers and standing ovations as he promised to tackle corruption and injustice.
The BBC's Paul Welsh in the capital, Monrovia, says it was an accomplished performance from a relatively unknown businessman who had never been asked to make a speech like this before.
Under Mr Taylor, Liberia was accused of destabilising its neighbours and Mr Bryant promised this would now end.
"Never again will we Liberians use war as a way of addressing our concerns," he said.
Our correspondent says the new government faces big challenges.
About 45,000 fighters, half of them children, must still be disarmed.
And Mr Bryant also has the tough job of persuading former enemies to work together to rebuild Liberia.
In a reminder of the devastation wrought by the fighting, the guests at the inauguration ceremony were sitting on plastic chairs because the parliament building had recently been looted.
And the sombre ceremony was punctuated by the sound of these chairs breaking and people falling to the floor.
Mr Taylor, now in exile in Nigeria, pledged his support for the peace process on the eve of the swearing-in ceremony.
His wife, Jewel, travelled from Nigeria to attend the ceremony.
"It's a new chance to start a new page in the history of this nation," she told the AFP news agency.
Mr Bryant - a veteran campaigner against the warlords who have plagued his country - is expected to steer Liberia towards fresh elections in 2005.
Thousands died in three battles for the capital this year and almost half the population has been forced from their homes.
Many thousands remain destitute after fleeing to Monrovia.
"We are expecting the Bryant government to come to our aid because we do not have drinking water," said a resident of the Buzzy Quarter slum.