Vietnam's legislature has approved a new prime minister and president, both of which are seen as economic reformers loyal to the ruling Communist Party.
Dung is one of the new generation of Vietnamese politicians
Nguyen Tan Dung, 56, became the country's youngest prime minister since unification in 1975.
Earlier, Nguyen Minh Triet, Communist Party chief for Ho Chi Minh City, was appointed as the country's president.
The appointments mark a major reshuffle of senior figures in the Communist Party, to bring in younger leaders.
Both Mr Dung and Mr Triet are from the south of Vietnam, and this will be the first time the government has been headed by two southerners since 1975.
Nguyen Tan Dung, 56
Groomed for top by outgoing PM Phan Van Khai
Army background suggests politically conservative
Southerner thought to favour more economic reform
Nguyen Minh Triet, 63
Party chief in Ho Chi Minh City, reputed to favour economic openness
Was in charge when underworld figure Nam Cam tried and executed
Mr Dung, who has a military and police background, was formerly deputy PM and has been groomed for years to replace 72-year-old Phan Van Khai.
"Our urgent task is to quickly develop in a sustainable way and pull the country out of backwardness and fight corruption," Mr Dung said in a speech to the National Assembly.
The leadership changes and other cabinet positions were decided behind closed doors at April's five-yearly National Congress.
As sole candidates for the job, Mr Triet won 94% of the National Assembly vote, while Mr Dung received 92% of the vote.
Vietnam's president is the third most powerful figure in the country after the head of the Communist Party - Nong Duc Manh - and the prime minister.
However, the BBC's Bill Hayton in Vietnam says the presidency does have considerable prestige which Mr Triet will be able to use to support his allies against those within the party who are hostile to change.
The path was cleared for the reshuffle to take place last weekend, when the legislature approved the resignation of Prime Minister Phan Van Khai as well as President Tran Duc Luong and National Assembly Chairman Nguyen Van An.
On Monday, the increasingly visible assembly elected Nguyen Phu Trong, 62, as its new chairman.
As the country's new president, Mr Triet has a lot of experience of combating corruption, an issue high on the Vietnamese government's agenda.
In Ho Chi Minh City, his campaign to bring down mafia boss Nam Cam led to the arrests of several officials.
Mr Triet is also expected to take a more active role in national politics than his predecessor, and to push for faster privatisation and deregulation, according to the BBC's Bill Hayton in Hanoi.
The new leaders will also be looking ahead to Vietnam's expected entry into the World Trade Organisation, and the Asia-Pacific Economic Co-operation (APEC) conference being hosted by the country in November.