Ravalomanana has already been sworn in once
Marc Ravalomanana took the oath of office in front of a crowd of 100,000 people, significantly including western diplomats, in the capital, Antananarivo.
This is the second time that Mr Ravalomanana has taken the oath of office but the BBC's Alastair Leithead in Antananarivo says this time he has legal backing.
Mr Ravalomanana claimed victory in last December's elections, although official results said that neither candidate had won outright.
Last week, a recount gave the self-made millionaire and mayor of the capital, 51% of the vote.
New talks
At Monday's ceremony, the president of the High Constitutional Court placed the sash of red, green and white, the colours of the Malagasy flag, over Mr Ravalomanana's shoulders, before declaring him president.
"I solemnly take an oath before God, the nation and the people that I will assume the functions of President of the Republic following the Constitution and the laws of the state for the good of all inhabitants," said Mr Ravalomanana.
A new round of talks between the bitter rivals will be held next week in Senegal in a bid to solve the long-running dispute which has brought Madagascar's economy to a standstill.
The Senegalese President, Abdoulaye Wade, said the talks would be held on 13-14 May, the French news agency, AFP, reports.
The two men signed a deal in the Senegalese capital, Dakar, last month, but it has not been implemented.
Exile
Representatives from western powers attended the ceremony.
Our correspondent says this shows the international community is starting to lean towards Mr Ravalomanana after being largely neutral up to now.
However, the ambassadors of former colonial ruler France and the United States were not present.
Mr Ratsiraka has dismissed the ceremony - the second time Mr Ravalomanana has been sworn in since December's vote - as a second coup d'etat.
To coincide with the ceremony, Mr Ratsiraka was planning to hold a special meeting of his government which is now in exile at Tamatave in the east of the island.
In recent months, the Indian Ocean state has been increasingly, and sometimes violently, split between supporters of the two men.
Festive lights
The Organisation of African Unity - which has been trying to broker an agreement - has failed to come out in support of either man.
Festive lights - usually reserved for the country's Independence Day celebrations - decorated the streets of Antananarivo ahead of the swearing-in ceremony.
Efforts by his government in exile and provincial governors to destabilise Antananarivo and its new president are continuing.
For months, a blockade between the capital and the main port has starved the city of fuel and crippled its manufacturing industry and thus its economy.
Governors of most of the provinces outside Mr Ravalomanana's base of Antananarivo are continuing with their plans for secession to a confederation of independent states.