Kurmanbek Bakiyev took the oath of office in front of assembled dignitaries and other guests in the main square in Bishkek, Kyrgyzstan's capital.
In his inauguration address, Mr. Bakiyev said he wants to pursue an independent foreign policy at a time when the landlocked, impoverished nation is under increasing pressure from the outside world.
The former opposition leader made no mention of the 1,000 U.S.-led troops stationed in the country to support combat operations in nearby Afghanistan.
But U.S. officials including Secretary of Defense Donald Rumsfeld recently received assurances the troops will be allowed to remain as long as necessary to bring stability to Afghanistan.
The issue has taken on added importance since last month, when neighboring Uzbekistan said U.S. troops based there must leave.
The United States had strongly supported efforts to find refuge abroad for Uzbek refugees who fled to Kyrgyzstan in May following violence in the Uzbek city of Andijan.
Kyrgyzstan is also under pressure from Russia, which maintains its own military base in the mountainous country.
Mr. Bakiyev won a landslide victory in a presidential election in early July that Western observers said was free and fair.
He had been acting leader of the country since street protests in March forced longtime leader Askar Akayev to flee the country.