Wearing a traditional African headdress, Sirleaf took the oath of office in a ceremony attended by thousands of Liberians and scores of foreign dignitaries, including first lady Laura Bush and Secretary of State Condoleezza Rice.
"We know that your vote was a vote for change, a vote for peace, security ... and we have heard you loudly," Sirleaf said in her inaugural speech.
"We recognize this change is not a change for change's sake, but a fundamental break with the past, therefore requiring that we take a bold and decisive steps to address the problems that have for decades stunted our progress," she said.
Standing in front of a one-starred Liberian flag with her left hand on a Bible, Sirleaf pledged to "faithfully, conscientiously and impartially discharge the duties and functions of the office of president of the Republic of Liberia to the best of my abilities, so help me God."
Sirleaf takes charge of a nation struggling for peace after a quarter century of coups and war and she has promised to unite it.
Speaking for the first time as president, she also pledged to stamp out corruption to secure the trust of skeptical foreign donors whose aid is desperately needed to rebuild.
In a statement, U.N. Secretary-General Kofi Annan congratulated Sirleaf, saying she had a "historic mandate to lead the nation toward a future of lasting peace and stability."
Security was tight at Monday's ceremony, with armed U.N. peacekeepers surveying the scene from atop surrounding buildings with binoculars.
The U.N. has redeployed 500 peacekeepers previously stationed outside the capital to strategic points in Monrovia and the international airport. Liberian police, though unarmed, have also increased their presence on the streets.
Two U.S. Navy warships also were visible offshore for the first time since the war ended in 2003, a rare show of support also meant to protect two high-profile guests: Mrs. Bush and Rice. Also attending were several African heads of state, including Nigeria's Olusegun Obasanjo and South Africa's Thabo Mbeki.