Barack Obama became the first black president of the United States on Tuesday and promised swift action to meet the crisis of two wars and a badly weakened economy.
With his hand on the Bible used in the 1861 inauguration of Abraham Lincoln, the 47-year-old ascended to the pinnacle of American political power.
The National Mall, which stretches from the foot of Capitol Hill west to the Lincoln Memorial, was jammed with hundreds of thousands of spectators, who came to witness the historic transfer of power.
"Today I say to you that the challenges we face are real, they are serious and they are many," Obama said in a prepared text of his inaugural speech to be delivered after being sworn in as the 44th US president.
"They will not be met easily or in a short span of time. But know this, America -- they will be met," he said in the speech delivered from the steps of the US Capitol.
The inauguration of Obama, the son of a black Kenyan farther and a white mother from Kansas, was steeped in symbolic meaning for African-Americans, who for generations suffered slavery and then racial segregation that made them second-class citizens.
Obama, a Democrat taking over the presidency from Republican George Bush, said the economic crisis buffeting the country was the result of "greed and irresponsibility on the part of some" and promised to keep a watchful eye to ensure that the market did not spin out of control.
He cited the worst US economic conditions in 70 years and US involvement in wars in Iraq and Afghanistan as having placed the country "in the midst of a crisis".
He pledged bold and swift action on the "badly weakened" economy, a top priority as he works with the US Congress on an estimated $850 billion (SFr963 billion) stimulus package aimed at jolting the economy back to life.
He also vowed to responsibly pull US forces out of Iraq and forge peace in Afghanistan, while pledging to find a new way forward in relations with the Muslim world.
"To the Muslim world, we seek a new way forward, based on mutual interest and mutual respect."
Obama, a practising Christian, spent several years of his childhood in Indonesia, the most populous Muslim nation in the world.
Under his predecessor, US relations with Muslim nations have often been tense, particularly after the September 11, 2001 attacks.
Many Muslims were particularly angered by the US-led wars in Iraq and Afghanistan and the opening of a prison for foreign terrorism suspects at the US military base at Guantanamo Bay, Cuba.
But he warned those who wage terrorism around the world that America's resolve remained strong.
"We say to you now that our spirit is stronger and cannot be broken. You cannot outlast us, and we will defeat you."
Before Obama's swearing in, Joe Biden took the oath as vice-president.
The role of the 66-year-old former Delaware senator is to assume the presidency in the event Obama cannot serve.
Beyond that, his duties depend on the wishes of the president.
Heads of state and government leaders around the world, including Switzerland, hailed the inauguration of Obama.
The British prime minister, Gordon Brown, spoke of a new chapter in American and world history.
French president Nicolas Sarkozy pledged to work "hand in hand" to face the challenges, while German Chancellor Angela Merkel said she hoped both sides would listen to each other to solve the problems together.
Swiss President Hans-Rudolf Merz said he expected the US and its new president to take a leading role in tackling global issues.
The former South-African president, Nelson Mandela, praised Obama as a "new voice of hope" for the world and compared his inauguration as US president to South Africa's historic transition to democracy.
swissinfo with agencies
At least one million people viewed the inauguration from Washington's National Mall.
Hundreds of thousands of additional spectators packed Pennsylvania Avenue to watch the inaugural parade. The record was set during the 1965 inauguration of Lyndon B. Johnson, when 1.2 million people attended.
240,000 tickets have been distributed, free of charge, for the swearing-in ceremony on Capitol Hill.
Some online ticket brokers were selling seats for more than $8,000.
Temperatures were around -2°C in Washington by the time of the midday ceremony.