Governor-General Quentin Bryce swore in the ministers this afternoon before a first cabinet meeting in Canberra.
Rudd named six women to his cabinet, the largest number in Australian parliamentary history.
Days after he dramatically ousted the country's first woman premier Julia Gillard, the 55-year-old Rudd named 11 women ministers out of the 30 all up on the frontbench - and six in cabinet.
In another first, 43-year-old Ed Husic was elevated to a senior role and named parliament secretary to the Prime Minister as he become the first ever Muslim to be sworn on to a federal government frontbench.
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Rudd said he wanted the "best players on the field" and his new ministry has been chosen on merit and it outpoints the opposition on quality and experience, local media reported.
He pledged to work for a "stronger, fairer Australia... and never ever, ever allow the fair-go to be thrown out the backdoor."
The women ministers include newcomers Jacinta Collins as minister of Mental Health and Ageing, Tasmanian MP Julie Collins as minister for housing, Homelessnes and status of Women and Catherine King as minister for Regional Australia.
"I'm a guy who believes in meritocracy, and when you find people of merit, they should be promoted," he said.
Some of his key supporters Joel Fitzgibbon and Kim Carr have returned as Agriculture Minister and Industry and Innovation Minister respectively whereas some supporters of Gillard continue to remain in Cabinet with different roles.
The 20-member cabinet includes finance minister Penny Wong, health minister Tanya Plibersek and families minister Jenny Macklin.
Meanwhile, a new poll, the first since Rudd's return as Prime Minister, has ranked him in a significant lead as the country's preferred leader.
Fifteen per cent of those surveyed were uncommitted.
Rudd's position shows an 18 per cent jump from Gillard's position in March. Rudd has said he was heartened by the boost Labor has received. In a statement, he said it was encouraging to see voters already responding to his brand of "positive, policy-driven" politics.
However, the poll shows the opposition Coalition still leads Labor 51 per cent to 49 per cent, on a two-party preferred basis.