Mugabe, 89, pledged "to observe, uphold and defend the constitution of Zimbabwe" in an oath administered by Chief Justice Godfrey Chidyausiku, extending his 33-year rule.
Supporters clad in clothes emblazoned with the image of the man who has lead their nation since independence in 1980 filled the 60,000-seater venue, a show of force after elections many say were rigged.
Opposition leader Morgan Tsvangirai insists the July 31 vote was stolen and his party boycotted the inauguration.
Former colonial power Britain has called for an "independent investigation" into the conduct of the election, which Mugabe officially won by a landslide.
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Unlike previous low-key investitures, today's event -- replete with banners, flags and chants -- carried strong echoes of Mugabe's inauguration as prime minister of a newly independent Zimbabwe in 1980.
A no-show by many neighbouring leaders -- including President Jacob Zuma of regional power-broker South Africa -- did little to dampen enthusiasm.
Tanzania's Jakaya Kikwete, Namibia's Hifikepunye Pohamba and the Democratic Republic of Congo's Joseph Kabila were among those leaders who did attend.
Gates to the Chinese-built stadium, the venue of Mugabe's inauguration as president in 1987, opened shortly after dawn.
The day was declared a public holiday, helping boost attendance.
"Mr Mugabe, you are one of a kind," sang a group of supporters slamming the sides of the minibus taking them to the stadium, while others waved fists as drivers honked their horns.
"It is a great day for Zimbabwe and the world will come to a standstill today," said Alfred Tome, the Harare provincial administrator and spokesman for the organisers.
Banners around the oval stadium carried messages praising African leaders and denouncing western governments accused of meddling in Zimbabwe's political affairs.
The inauguration had been delayed after Tsvangirai challenged the poll results in a petition to the Constitutional Court that was later dropped.
The Constitutional Court confirmed Mugabe as president and declared the elections "free, fair and credible", saying the results "reflected the free will of the people of Zimbabwe.