Alex Salmond has made political history after becoming the first Nationalist to be elected first minister of Scotland.
The SNP leader was voted into office in parliament by 49 votes to 46, after he was supported by the Greens. The Lib Dems and the Conservatives abstained.
Mr Salmond will head the first minority administration since devolution, saying he would seek parliament's approval "policy by policy".
He also hit the ground running by naming his cabinet and ministers.
The Scottish Parliament election almost two weeks ago saw the SNP win 47 seats, just one ahead of Scottish Labour, while the Scots Liberal Democrats were left with 16.
The Scottish Conservatives have 17 MSPs, although one of their number, Alex Fergusson, has taken up the politically neutral job of presiding officer.
The Scottish Greens have two MSPs and the colourful Independent Margo MacDonald, who abstained from the first minister vote altogether, was also re-elected.
Mr Salmond was voted first minister after seeing off a final challenge from Scottish Labour leader Jack McConnell.
He became the first Nationalist to win power in the party's 73-year history.
His election was greeted with applause and cheering in the Scottish Parliament chamber.
Mr Salmond described Holyrood as a "parliament of minorities", but denied claims that Scotland had become a divided nation.
"I believe Scotland is ready for change, ready for reform," he told MSPs
"We're a small nation but we've got a big future."
Mr McConnell, the former first minister, congratulated Mr Salmond on his victory and said he would be proud to lead the largest opposition party the Scottish Parliament has ever had.
He promised that Labour would not oppose for its own sake, but he also delivered a warning to his successor.
"Voltaire once said that governments need both shepherds and butchers and I think Alex may need to be more of a shepherd than a butcher in his new role, looking around this flock here and trying to secure majorities for his policies," said Mr McConnell.
Mr Salmond said he would now go forward in a minority administration by appealing for support "policy by policy" across the chamber.
This will make it difficult for the SNP to achieve one of its main goals of holding a referendum on Scottish independence.
He added: "In this century there are limits to what governments can achieve. But one thing any government I lead will never lack is ambition for Scotland."
Mr Salmond will also embark on a shake-up, cutting the number of departments from nine to six.