Beatrix, 75, shed a tear before signing the act of abdication at the Royal Palace in Amsterdam, witnessed by Willem-Alexander, 46, his Argentine-born Queen Maxima, 41, and members of the government.
A cry went up from the 25,000-strong crowd in the Dam, the main square opposite the palace where the signing was shown on giant screens.
Willem-Alexander, Maxima and Beatrix appeared in front of the crowds on the palace balcony, bedecked with roses and oranges -- the symbol of the royal house -- before heading for the enthronement ceremony in the neighbouring Nieuwe Kerk.
The Dutch monarch is sworn in before a joint session of the houses of parliament in the deconsecrated church, rather than crowned, because church and royalty are separated in The Netherlands.
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The king entered the church at a stately pace with Maxima under an awning of fishing nets, an ancient tradition in the seafaring nation.
Before taking his oath, the king thanked his "dear mother" for the "many beautiful years during which she was our queen".
"I'm treading in your footsteps. I have a clear vision of my office. But no one knows what the future brings," he said.
The king swore "to preserve the independence and territory of the kingdom to the best of my ability ... So help me God."
Dutch animal rights activists have criticised his ermine-lined cloak, but Willem-Alexander noted that it is old and so no blood had recently been shed for it.
MPs and senators then swore an oath to the king, although 16 MPs have refused to do so, saying their allegiance is to the constitution.
A who's who of royals-in-waiting, including Britain's Prince Charles, Spain's Prince Felipe and Japan's Prince Naruhito and his wife, Crown Princess Masako, attended the ceremony.
Former UN secretary general Kofi Annan and International Olympic Committee head Jacques Rogge also attended.