The territory's incoming chief executive Carrie Lam was among the dignitaries present for today's outdoor ceremony at a harbour-side convention centre.
A few streets away, a small group of pro-democracy protesters clashed with police and pro-China counter- protesters.
Police on Wednesday arrested 26 people after they climbed onto a giant flower sculpture symbolising Hong Kong's reunification with China. Protesters fear Beijing's ruling Communist Party is eroding the financial centre's civil liberties.
Chinese President Xi Jinping and will preside over Lam's inauguration before returning to Beijing later today.