Iraq's first democratically elected government in half a century was still incomplete as wrangling continued over filling the key defence and oil portfolios when the cabinet list was read out during the ceremony on Tuesday.
The partial cabinet list comprises 30 names, including those of al-Jaafari and his two deputy prime ministers.
As al-Jaafari unveiled his partial line-up, however, Sunni Arab leaders complained of tokenism and even threatened to quit the government altogether.
The community fears a government dominated by Shias and Kurds - two communities oppressed by Saddam's government -would pursue an aggressive agenda to remove them from the country's institutions and security forces.
Swearing the oath
Taking the oath of office, al-Jaafari said: "I swear to God the Almighty to do my utmost to carry out my duties and responsibilities and to preserve Iraq's independence and sovereignty as well as look after its interests and people."
Violence is intensifying in many
areas despite political progress
The 29 other members of his cabinet repeated the same words. The occasion was hailed by the master of ceremony as "a historic day" for Iraq.
The Defence Ministry is expected to be handed to a Sunni, but Iraq's new leaders were struggling to find a candidate whose record in the former government does not bar him from office.
The new interim government takes over from Iyad Allawi's US-appointed administration, and will be tasked with drafting a permanent constitution and organising fresh elections before the end of the year.
Vice-president Ghazi al-Yawir did not attend the ceremony.
The ministries of defence, oil, industry and human rights have been left vacant. Two deputy prime ministers have not been named yet.
Victims of war
Al-Jaafari - a devout Shia and leader of the religious party Dawa - began his inaugural speech with a verse from the Quran and by paying tribute to the victims of wars.
"I swear to God to do my utmost to carry out my duties and responsibilities ... preserve Iraq's independence and sovereignty as well as look after its interests and people"
Iraqi government's swearing-in oath
President Jalal Talabani said: "On this historic day, which sees the announcement of the first democratically goverment, it is my pleasure to congratulate the Iraqi people and wish my brother Ibrahim al-Jaafari and his colleagues success in their mission.
"I expect a lot of good things from our new united, federal and independent Iraq," he added.
Since al-Jaafari announced a partial line-up on 28 April, anti-US fighters have stepped up their attacks, leaving about 150 people dead, mostly Iraqi civilians.
On Tuesday, Aljazeera reported that six Iraqis, among them four policemen, were wounded when a car bomb and an explosive device blew up on the expressway in al-Ghazaliya west of Baghdad.
In al-Dura south of Baghdad a group of armed men shot and killed an official in the water resources ministry when he was on his way to his office.
In Abu Ghraib, three Iraqis were killed and three others wounded when an unidentified mortar round landed on their home, Aljazeera reported.
Earlier, 15 people - two civilians, an Iraqi soldier and 12 fighters - were killed in a massive gun battle that broke out when a checkpoint, manned by US and Iraqi forces, was attacked on Tuesday in the western flashpoint city of Ramadi.