Susilo Bambang Yudhoyono has promised an ambitious programme of reforms, soon after he was sworn in as Indonesia's first directly-elected president.
Mr Yudhoyono is a former security minister
Mr Yudhoyono undertook to "roll up his sleeves" and tackle problems such as corruption, nepotism and terrorism.
The BBC Jakarta correspondent says the voters have given the president a huge mandate, and they expect him to use it.
Mr Yudhoyono said one of his biggest challenges was corruption and he would lead a programme to fight it.
Key to that challenge will be the new attorney general, announced on Wednesday as Abdul Rahman Saleh, a supreme court judge.
Another key position, that of finance minister, will be filled by Jusuf Anwar, an economist at the Asian Development Bank.
But there was disquiet at the choice of economics minister, Aburizal Bakrie, a businessman whose group ran up huge debts during the Asian financial crisis five years ago.
Hassan Wirayuda remains as foreign minister in the new government.
Other areas in which Mr Yudhoyono promised improvement included economic growth - he said more than 16% of Indonesians were below the poverty line - and provincial unrest.
"My administration will give a special attention on the handling of conflicting situations in Aceh and Papua," he said.
Widely known by initials SBY
Former general and security minister
Image as man of action may have won voters over
Faces tasks of tackling regional unrest and terrorist threat
He also warned that the country faced the continuing threat of terrorism.
Indonesia suffered three major terrorist attacks while his predecessor, Megawati Sukarnoputri, was in office, including the Bali nightclub bombings in October 2002.
But the new president sounded a note of caution, warning that all these problems would not be solved immediately.
"It is impossible to resolve all of those complicated problems within 100 days... But I have a strong conviction that our determination and good will are far more superior than the problems we are facing. At this point, our character as a great nation is truly under a severe test," he said.
There are huge expectations resting on his shoulders, and according to the Jakarta Post, at least 200 people held a demonstration on Wednesday demanding that Mr
Yudhoyono tackle corruption in his first 100 days of office.
Earlier, regional and foreign leaders witnessed him swear to serve the nation as a copy of the Koran was held above his head.
Former President Megawati chose to stay away in what appears to be a deliberate snub towards the man who defeated her.
She was due to make a farewell speech during the ceremony, but analysts say she has apparently not forgiven Mr Yudhoyono for quitting her cabinet earlier this year to run against her.
Wearing a grey suit and traditional peci cap, Susilo Bambang Yudhoyono stood before the assembled ranks of politicians and foreign dignitaries to read the oath of office.
"In the name of God, I will fulfil my duty as president to the best of my ability," Mr Yudhoyono said, as a religious leader held a copy of the Koran above his head.
Mr Yudhoyono has spent the last month interviewing potential ministers and mulling over the challenges that face him in his new job.
He is said to be considering setting up US-style national councils to provide him with expert advice - all part of what his aides say will be a more professional technocratic approach to government.