The satellite, named "Giove A," took off from the Baikonur Cosmodrome in Kazakhstan aboard a Soyuz rocket on schedule at 11:19 a.m. local time (0519 GMT). After the launch amid clear skies, the satellite was released into orbit and began transmitting signals, scientists said.
Journalists monitored the liftoff through a linkup at the headquarters of the European Space Agency, or ESA, in Paris.
The euro3.4 billion (US$4 billion) Galileo project will eventually use about 30 satellites and end Europe's reliance on the GPS system, which is controlled by the U.S. military.
Last year, U.S. President George Bush ordered plans for temporarily disabling GPS satellites during national crises to prevent terrorists from using the navigational technology.
Galileo is under civilian control. The European Space Agency says it will guarantee operation at all times, except in case of "the direst emergency." It also says users would be notified of any potential satellite problems within seconds.