Angela Merkel, leader of the Christian Democrats (CDU), has been sworn in as Germany's first woman chancellor at a ceremony in the country's parliament.
There were warm words and flowers between old adversaries
Mrs Merkel, a conservative, will head a coalition with the centre-left Social Democrats (SPD), who ruled before.
She is also the first chancellor to have grown up in the former communist eastern part of the country.
In the Bundestag 397 MPs voted for her, but 51 members of the governing coalition voted against her.
The BBC Berlin correspondent says this is a sign of the problems she will face in the future.
During a handover ceremony on Tuesday Mrs Merkel paid tribute to her predecessor Gerhard Schroeder, who is preparing to leave politics.
"You can be sure that I will handle with responsibility the things that made you a German chancellor whom people will remember fondly," she said, after Mr Schroeder presented her with a bouquet of flowers.
1. Christian Democrats/Christian Social Union (CDU/CSU): 226
2. Social Democrats (SPD): 222
3. Free Democrats (FDP): 61
4. Left Party: 54
5. Greens: 51
Mrs Merkel will make her first foreign trip as chancellor on Wednesday, visiting Paris and Brussels, followed by a visit to London on Thursday.
Her foreign policy stance is more pro-US than that of Mr Schroeder, who opposed the war in Iraq.
Mrs Merkel has pledged to revive the faltering German economy.
But plans to cut taxes for high earners have been shelved, as have plans to liberalise employment law and introduce regional wage negotiations.
The parties have agreed to work to cut Germany's budget deficit with spending cuts and moderate tax increases.
The BBC's William Horsley says there is less disagreement over foreign affairs, where Mrs Merkel hopes to smooth relations with the US, boost Germany's profile within Nato and promote fair dealing within the European Union.
KEY CABINET POSTS
Vice Chancellor/Labour: Franz Muentefering (SPD)
Foreign Affairs: Frank-Walter Steinmeier (SPD)
Interior: Wolfgang Schaeuble (CDU)
Defence: Franz Josef Jung (CDU)
Finance: Peer Steinbrueck (SPD)
Economy/Technology: Michael Glos (CSU)
Agriculture: Horst Seehofer (CSU)
Health: Ulla Schmidt (SPD)
Justice: Brigitte Zypries (SPD)
But she has been forced to make concessions to trade unions and accept Social Democrats in key cabinet roles.
Mrs Merkel's CDU and their Bavarian allies, the Christian Social Union (CSU), were denied a clear majority in September's elections. The new "grand coalition" of left and right boasts broad support within the Bundestag.
With 448 seats, Mrs Merkel easily passed the threshold of 308 votes needed to be confirmed as chancellor.
But correspondents say her power is likely to be diluted, as SPD figures will run a string of key ministries.
The SPD has the top jobs in eight ministries, including those of foreign affairs, finance and labour.
The CDU and CSU head six ministries, including defence and economic affairs. Their eight cabinet posts include that of the chancellor herself and one other minister in her office.