A fierce critic of U.S. policies who helped lead violent street uprisings that toppled two predecessors, Morales raised a clenched fist in a leftist salute to become Bolivia's first Indian president.
He defiantly declared his election marks the beginning of the end to hundreds of years of oppression against Bolivia's impoverished Indian majority, recalling that just decades ago Indians had no place on segregated sidewalks.
"I wish to tell you, my Indian brothers, that the 500-year indigenous and popular campaign of resistance has not been in vain," Morales said, promising his government would move to squelch discrimination dating to the Spanish conquest in 1520.
The 46-year-old son of a poor peasant farmer, Morales vowed in his inaugural speech that his socialist government, now embarking on a five-year term, would reshape Bolivia, as he lashed out at free market economic prescriptions, calling them a failure in attempts to end chronic poverty here.
"The neoliberal economic model has run out," Morales loudly declared after taking up the red, yellow and green sash in the colors of the Bolivian flag. Thousands of Aymara, Quechua and other Indians, many in brightly woolly caps and ponchos, cheered along with leftist sympathizers, miners and students on the cobblestone plaza outside Congress. Firecrackers boomed and some Indians blew long, wailing notes on cow horns.
Morales recalled past decades of harsh discrimination as something akin to apartheid-era South Africa, adding "Bolivia seems like South Africa" when reviewing some of the most violent chapters of race relations.
Tieless in character with his informal style, the former opposition leader vowed his leftist Movement Toward Socialism would be stubbornly independent, steering clear of any outside influences. While he has said his government would welcome warm relations with the United States and other governments, he vowed he would not "submit" to any outside powers.
As part of a more nationalistic and leftist agenda, he also said he would move ahead with plans to consolidate control over Bolivia's abundant natural gas reserves and also convoke a constitutional assembly later this year to answer Indian demands for a greater share in power at all levels of society.
Nonetheless, he said his government would rule "with all and for all" and would not seek revenge for the past. He also reiterated promises to respect and protect private property.
Mobbed by supporters as entered Congress for his inauguration, he wore an open-necked, button-down shirt and a thin brown-and-beige scarf affixed to a dark suit jacket.
Morales is widely seen as part of Latin America's shift toward the political left, but it's unclear if he will maintain free-market policies or take a more radical path remained a question.
He held a meeting Saturday with U.S. Assistant Secretary of State Thomas Shannon and was to talk Monday with Venezuelan President Hugo Chavez.
"I would like to thank the representative of the United States, Mr. Shannon, for his visit," Morales said. "He visited me in my humble home to express his wishes to strengthen diplomatic relations."
"Starting with the government of the United States and concluding with the (Cuban) government of Fidel Castro, we have international support."
Critics have charged U.S. President George W. Bush with being inattentive to Latin America's tilt to the left this decade while campaigning against terrorism and guiding U.S. military intervention in Iraq. During Bush's presidency, several Latin American nations have elected leftist presidents wary of free-market policies.
Sunday's inauguration attended by 11 national leaders, including left-leaning presidents Nestor Kirchner of Argentina, Luiz Inacio Lula da Silva of Brazil and Ricardo Lagos of Chile.
"Chavez! Chavez!" the crowd shouted uproariously as the Venezuelan, whom Morales said he openly admires, strode past blowing kisses.
Spain's crown prince also attended the ceremony, but Castro, a top invitee, sent his vice president.
Outside, Walter Villarro was among 2,000 of miners dressed in their trademark helmets and black leather jackets who also turned out as unofficial guards in solidarity with Morales. He and other miners are counting on Morales do revive an industry that has been stagnant for years in Bolivia, despite big metal reserves.
"Power is in the hands of the Bolivian people for the first time," Villaro said.
A potentially prickly subject in U.S. relations with Bolivia is the production of coca, the raw material for cocaine.
Poor Bolivians traditionally chew the leaf to combat hunger and the effects of altitude, and Morales has said he wants to expand the acreage allotted for coca in Bolivia while cracking down on the international cartels that traffic the plant. Shannon has said that any increased cultivation could provide an opening for traffickers to expand.
Outside the inauguration Sunday, Aymara Indian Zenoino Perez, wearing a leather cap adorned with feathers, played a reed flute as about a dozen of the people from his village of Toro Toro far from La Paz.
"We've been discriminated against for 500 years, but now we have Evo and a government that will represent us," Perez said.