In his inaugural address, he called on all New Yorkers to work together to rebuild the city in the wake of the Sept. 11 attacks.
"This is an historic moment," he said. "We cannot afford to fight with each other."
To business owners, he said: "This is no time to leave the Big Apple. Your future is New York. ... New York is safe, strong, open for business and ready to lead the world in the 21st century."
Bloomberg, a billionaire businessman, took the oath standing beside his 92-year-old mother, Charlotte.
Bloomberg first took the oath before the city clerk Monday afternoon. He was also sworn in by the man he replaced, Rudolph Giuliani, on a platform in the middle of Times Square just minutes after the crystal ball dropped to signal the beginning of 2002.
In the noontime ceremony, a giant American flag unfurled behind the podium after Bloomberg stepped outside from the doors of City Hall. Bloomberg wore an American flag pin on the lapel of his dark overcoat.
More than 4,000 invited guests braved the freezing weather for the inaugural, including Sens. Hillary Clinton and Chuck Schumer and former mayors David Dinkins and Ed Koch.
Before the chief judge of New York State, Judith Kaye, administered the oath of office, Bette Midler sang the National Anthem and several different religious leaders offered prayers.
Bloomberg, 59, enters office faced with three consecutive years of budget gaps greater than $3 billion, an underperforming 1.1-million student school system and a citizenry still jittery from the terrorist attack, the anthrax scare and countless false alarms since then.
The new mayor's task is made even more overwhelming because Bloomberg, who made billions on Wall Street and from Bloomberg L.P. the privately held financial information company he founded has never held public office.
"We shouldn't forget those who couldn't be here," Bloomberg told the Times Square crowd, as it sang "New York, New York" and red, white and blue confetti fell. "But the future is nothing but good for New York."
Bloomberg, 59, spent $69 million of his own money in his bid to succeed Giuliani, the two-term mayor who received widespread acclaim for his response to the terrorist attacks.
The two hugged after Bloomberg finished his midnight recitation.
"Take care of these people," Giuliani advised the new mayor.
Bloomberg said last week that the swearing-in ceremony at Times Square was arranged to demonstrate how well New York had rebounded.
The public, televised ceremony was a break from tradition. Ordinarily, the mayor is sworn in after midnight at a small, private affair. The largely symbolic ceremony is then followed by the formal swearing later in the day.
For Giuliani, the inauguration marks the end of a topsy-turvy eight years that as included an improved economy, a drastic drop in crime, racial controversies and the events of Sept. 11.
The two-term mayor said he was leaving the city in better shape than when he took office, and expected Bloomberg to do the same.
When asked by reporters how he felt about leaving office with sky-high approval ratings, he quipped, "I just better get out of here quick."
Giuliani brushed off a question about whether he would marry Judith Nathan, whose relationship with him made tabloid headlines as his marriage to Donna Hanover crumbled.
"I'm going to do the best I can to keep my personal life as personal as possible, not that I've succeeded at that very well in the last eight years," he said.
The mayor also announced his plans for Giuliani Partners, a consulting firm that will have a strategic partnership with accounting firm Ernst & Young and include several of his top City Hall aides.
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