Democrats are taking control of the US Congress after 12 years as a minority, with a woman at the helm of the House of Representatives for the first time.
"Today we change the direction of our country," said Nancy Pelosi, the new speaker and second in line to the presidency after the vice-president.
In another first, a representative used the Koran not Bible for their vow.
Correspondents say the shift in power could lead to challenges to the authority of the White House.
Democrats have said they will put pressure on US President George W Bush to begin a phased withdrawal from Iraq.
The first day of the new Congress will see the swearing-in of the 535 House and Senate members.
The results of the vote for Ms Pelosi were greeted with wild applause.
"I accept this gavel in the spirit of partnership, not partisanship," she said.
Her election had brought her closer to the ideal of equality, in "a historic moment for women of America, " she said.
On Iraq, Ms Pelosi said the American public had voted for a change of direction.
"The American people rejected an open-ended obligation to a war without end," she said.
Iraqis should do more to defend themselves, she said, calling on President Bush to promote stability and plan a redeployment of US troops there.
Ms Pelosi, who will be referred to as "Madam Speaker", has vowed to clean-up Congress, saying: "It takes a woman to clean house" - a reference to the corruption seen as widespread on Capitol Hill.
She has published a manifesto for the Democrats' first 100 hours of legislative time. Along with a promise to stamp out corruption, it includes plans to boost the minimum wage, increase stem cell research, and end subsidies for large oil companies.
Ms Pelosi is one of 86 women set to serve in this Congress - the highest number in US history - although the institution remains overwhelmingly male.
In the face of a Democratic majority in both the Senate and the House, Mr Bush, who has already held talks with Ms Pelosi, made an appeal for congressional unity.
"We've all been entrusted with public office at a momentous time in our nation's history and together we have important things to do," Mr Bush said in a speech on Wednesday morning.
"It is time to set aside politics and focus on the future," he added, urging Democrats not to pass "bills that are simply political" statements.
Leading Democrats have also called for a new spirit of bi-partisanship in Washington.
Senator Charles Schumer said: "We certainly want to work with the president. We hope that when the president says compromise, it means more than do it my way, which is what he's meant in the past."