The 53-year-old charismatic outsider who won Indonesia’s presidency made a call for national reconciliation and unity as he was sworn in.
Popularly known as Jokowi, he took the oath of office at a ceremony held at parliament in Jakarta.
Joko Widodo was then cheered through the streets as he made his way on a horse-drawn carriage to the state palace.
The former Jakarta governor is the first president not to have come from the military or political elite.
Elected in July, the former furniture exporter and son of a carpenter now leads the world’s third-largest democracy, with a population of about 250 million people.
Secretary of State John Kerry and Australia’s PM Tony Abbott were among those who attended the inauguration.
After reading the oath of office, he told Indonesians that “unity and working hand in hand are prerequisites for us to be a great nation. We will never become a great nation if we are stuck with division”.
“This is a historic moment for us all to move together, to work and work,” he said.
Joko Widodo then travelled through the capital in a horse-drawn carriage to the state palace with Vice-President Jusuf Kalla.
He was met by former president Susilo Bambang Yudhoyono at the palace. The two had met on Sunday for a tour of the estate.
An outdoor concert featuring rock bands is scheduled for Monday night, with Joko Widodo expected to appear on stage.
About 24,000 police and military personnel have been deployed, but correspondents say that the mood in the capital is upbeat.
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