After 20 years at the helm of the linguistically-split country at the heart of Europe, Albert, 79, signed the official act of abdication in a solemn ceremony held in the royal palace's grand chandelier-laden throne room.
Philippe, 53, is to be sworn in as sovereign at noon before parliament, after his father said he was stepping down due to old age and poor health.
In his last speech to the nation, Albert once more urged the country's leaders "to work tirelessly in favour of Belgium's cohesion".
"A big kiss", he added as she shed a tear and the audience of political leaders and other dignitaries broke into a long round of applause.
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Under sunny skies and a light summer breeze, flags fluttered across Brussels as the day of pageantry began with a thanksgiving mass in the cathedral and crowds lined outside shouted "Long Live the King".
The medieval cathedral of Saint Michael and Gudula was packed with the Belgian government and other dignitaries, but there were no foreign guests in attendance as Albert, dressed in full military uniform, slowly mounted the steps helped by Paola.
But worries persist that the shy and often awkward prince Philippe may lack the political skills of his father to maintain unity in a nation deeply divided between its Flemish- and French-speaking halves.
Mathilde, an outgoing 40-year-old who will be Belgium's first home-grown queen, is seen as his best asset in the couple's campaign to win the hearts of their 11.5 million people.
"Philippe, you have the heart and the intelligence to serve our country very well," Albert said in his abdication speech. "You and your dear wife Mathilde have all our confidence."