Salvador Sanchez Ceren, 69, of the FMLN party, becomes the first former guerrilla to lead the Central American country following his March victory.
In his inauguration speech, he promised to fight corruption and violence, and to govern “for everybody”.
El Salvador remains violent and deeply divided despite the end of a civil war in which some 75,000 people died.
Salvador Sanchez Ceren narrowly defeated the conservative candidate Norman Quijano by 0.2% in a run-off vote on March 9.
Speaking at his inauguration ceremony in the capital, San Salvador, he pledged “to serve as president of all Salvadorans”.
Salvador Sanchez Ceren added he would lead “with honesty, austerity, efficacy and transparency” in a country with high levels of corruption.
Last month, a Salvadoran judge issued an arrest warrant for a former President, Francisco Flores, who is accused of using $10 million of public money for personal use. He denies any wrongdoing.
Salvador Sanchez Ceren also promised that “security, employment and education” would be the priorities of his government.
El Salvador has one of the highest murder rates in the world, a problem largely blamed on gang violence.
As a rebel leader, Salvador Sanchez Ceren fought US-backed government forces during the civil conflict in which tens of thousands of people also disappeared.
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