African presidents attending the ceremony, including Nigeria's Olusegun Obasanjo, Uganda's Yoweri Museveni and Kenya's Mwai Kibaki, exhorted the international community to help rebuild the world's only state without a government.
Yusuf, 69, on Thursday took the oath in the Somali language as well-wishers clapped and cheered, waving the blue flag of the Horn of Africa state, and field guns thundered out a 21-gun salute.
The former regional commander was sworn in at a packed basketball stadium in the Kenyan capital Nairobi, after almost two years of arduous peace talks hosted by Kenya because of security concerns in Somalia.
Somalia's own capital, the ruined, gun-ridden city of Mogadishu, was not considered safe enough for the ceremony.
"A great day for Africa," read the stadium's electronic scoreboard.
The career soldier had been leader
of Puntland state since 1998
"In the name of Allah, I swear today that I will lead this country and the people of Somalia in justice, honesty and transparency, in order to solve the problems in our country," Yusuf declared.
"With the help of Allah I will follow the people's wish and solve their problems. I will not be biased towards anyone," he said.
"Please help me, Allah," he added to a cacophony of cheers.
Yusuf was elected on Sunday by a 275-member interim parliament in a further step towards restoring government to the fractious, clan-based country that descended into anarchy in 1991 following the ouster of military ruler Muhammad Siad Barre.
"I want to thank you, the Somali people, for finally not letting us down," Uganda's Museveni told the assembled Somali dignitaries.
"In the name of Allah, I swear today that I will lead this country and the people of Somalia in justice, honesty and transparency, in order to solve the problems in our country"
Abd Allah Yusuf Ahmad, Somalia's new president
Obasanjo said the fact that none of Yusuf's opponents had contested the election was "clearly a good reflection on the quality of our new democratic process in Africa".
"We must all continue to help Somalia on the path of sustained peace, reconciliation and harmony through physical and economic reconstruction," he added.
A career soldier and leader of Somalia's autonomous Puntland state since 1998, Yusuf is tasked with establishing a government in Somalia, where heavily armed militias rule their areas by the bullet.