Evo Morales has been sworn in as Bolivia's first indigenous president, pledging to end "500 years" of injustice against his people.
Mr Morales pledged to end injustice and inequality
"We're here to change our history... we're taking over," Mr Morales said.
He reaffirmed his pledge to "recover" the country's natural resources by renationalising them.
Thousands of Bolivians and many foreign dignitaries witnessed the colourful ceremony at the Congress in La Paz.
"I wish to tell you, my Indian brothers, that the 500-year indigenous and popular campaign of resistance has not been in vain," Mr Morales, an Aymara Indian, said during an emotional speech.
"We're taking over now over the next 500 years. We're going to put an end to injustice, to inequality."
The 46-year-old former llama herder and coca leaf farmer said the free-market model did not work in Bolivia, and that the privatisation of basic services and natural resources should be reversed.
"When we talk about recovering the territory we are talking about recovering the natural resources, and these need to be in the hands of the Bolivian people and the Bolivian state," he said.
He also acknowledged the magnitude of the task during his five-year term, as Bolivia still remains South America's poorest country, correspondents say.
Mr Morales is a fierce critic of the US and sees his election as a triumph for indigenous peoples.
Leaders attending Sunday's inauguration included Spain's Crown Prince Felipe, Luiz Inacio Lula da Silva of Brazil, Javier Solana representing the European Union and Venezuela's Hugo Chavez, who called Mr Morales "an emissary sent by God".
They were not present at Saturday's indigenous ceremonies at the archaeological remains of the Tiwanaku civilisation 65km (40 miles) from La Paz.
On Saturday, Mr Morales made a private offering to Pachamama, or Mother Earth, of sweets, wine and flowers, before moving to the pre-Inca temple of Kalasasaya.
There, barefoot and dressed as a sun priest and in front of thousands of supporters, he received the baton, encrusted with gold, silver and bronze, that will symbolise his Indian leadership.
The BBC's Daniel Schweimler in Bolivia says the ceremony was requested by Bolivia's indigenous community, which feels it has had a raw deal ever since the Spanish conquistadores colonised the region more than 500 years ago.