The presidential hopeful accused Bush of mishandling the economy and antagonising most of the United States’ friends and allies.
"Every day of this campaign, I will challenge George Bush for fundamentally taking our country in the wrong direction," Kerry said on Tuesday.
"Today, with confidence in the courage of our people to change what is wrong and do what is right, I come here to say why I’m a candidate for president of the United States of America," said Kerry, a US senator who represents the north-eastern state of Massachusetts.
With the aircraft carrier USS Yorktown as the backdrop, Kerry signalled in his address he was the one Democrat - who can go toe-to-toe with Bush on national defence issues.
Nine other Democrat contenders have announced plans to seek the US presidency.
Kerry, a decorated Vietnam War veteran, was especially critical of the president's Iraq policy, and called on the White House to share the burdens of administering postwar Iraq with the United Nations.
"For the Bush administration to reject the participation of allies in the UN is a miscalculation of colossal proportions," he said.
"We need to end the sense of American occupation as fast as possible and take the targets off of American soldiers," Kerry said.
George Bush seen as vulnerable
owing to failures in Middle East
Security issues have generally been viewed as the Republican president's strong suit. But Bush is seen as increasingly vulnerable because of problems ruling an Iraq where US officials have so far failed to restore normality.
"George Bush's vision does not live up to the America I enlisted in the navy to defend, the America I have fought for in the Senate, and the America that I hope to lead as president," Kerry said.
Creed of greed
Kerry also promised to end the "creed of greed" which he said characterised the Bush administration. Kerry told supporters he would work with them to reclaim fairness and equity for all US citizens - qualities he said had been elusive in the current administration.
"I’m running so that we can keep America's promise to reward the hard work of middle-class Americans and pull down the barriers that stand in the way of those who are struggling to join them," he told a cheering crowd in Mount Pleasant, South Carolina.
Kerry must overtake Democratic
contenders such as Howard Dean
The New England senator has been campaigning for months, but Tuesday's speech marked his campaign's official launch.
He hopes to capture the imagination of core Democratic voters, whose support he will need to prevail in next year's primary elections.
A senior US lawmaker with a patrician bearing and a sizeable campaign war chest, Kerry was a presumed frontrunner from the moment he announced his intention to vie for the White House in the November 2004 election.
But he has been overtaken in recent opinion polls and in fundraising by Howard Dean, a former Vermont governor and Washington outsider whose rough-hewn style and outspoken criticism of the Bush administration has won over many Democratic supporters.
The most recent survey released jointly on Tuesday by CNN and USA Today showed Kerry coming in fourth place among registered Democrats.
The poll conducted by the Gallup organisation, which queried Democratic voters on their favourite choice for the party's nomination, put Connecticut Senator Joe Lieberman in front with 23% support, followed by US Representative Richard Gephardt of Missouri with 13%, and Dean with 12%.
Kerry, the choice of 10% of Democrats polled, hopes to bolster that tepid support by boosting his criticism of the president and capitalising on the anti-Bush anger that has helped propel Dean to the top of many opinion polls.