Hery Rajaonarimampianina, 55, took the oath of office at a municipal stadium in the capital, calling for national unity and reaching out to political rivals to help return the Indian Ocean island nation to its past glory.
"I ask you my political family and friends, help me to promote the great destiny of national unity," he said.
"I want you to understand that it is not about us but about Madagascar, our collective future and our place."
The man he defeated in the December 20 presidential run-off, Robinson Jean Louis, was among those present at the inauguration ceremony.
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Jean Louis, the candidate backed by ousted leader Marc Ravalomanana, conceded defeat yesterday.
He told reporters that "this time, the opposition will be able to advise the state" instead of "always opposing, disrupting and marching on the streets."
International observers gave the vote the green light and called on the parties to respect the electoral process.