“Our place is in the European Union,” Mr Yushchenko told crowds in Kiev’s central Independence Square after taking the oath of office.
“My goal is Ukraine in a united Europe. Our road to the future is the road of a united Europe,” he told hundreds of thousands of supporters crammed into the plaza.
He also appealed to voters who supported his pro-Moscow rival Viktor Yanukovich during an election saga that divided the nation.
“I am the president of all of Ukraine. My victory is a victory for everyone,” he said.
Earlier inside parliament, the 50-year-old former central banker read aloud the oath of office with his right hand placed on the constitution and the Bible and hailed the mass popular protests against a fraudulent election that got him to the spot.
The chamber erupted into chants of “Yu-shchen-ko! Yu-shchen-ko!,” the battle cry of the “orange” protests.
Mr Yushchenko became the third president of an independent Ukraine, taking over after a decade of authoritarian-leaning rule by Leonid Kuchma, who was also present in the chamber for the ceremony.
Underscoring the change of course for the nation was the array of foreign dignitaries at the ceremony, including outgoing US Secretary of State Colin Powell, the head of NATO, leaders of several former Soviet satellites and one of the heroes of anti-Soviet struggles, Czech Republic’s Vaclav Havel.
After the formal ceremony in parliament, Mr Yushchenko received the commanders of the armed forces and then headed to Kiev’s central Independence Square to hail the “orange revolution’s” foot soldiers.
“We have thrown off the burden of the past. From now on, no one will dare tell us how to live and whom to elect,” he said.
The standoff over the transfer of power in Ukraine sparked Cold War-like exchanges between Russia and the West, with Moscow accusing Washington of trying to install its allies.