Cheered by a crowd of tens of thousands, attending a spiritual ceremony on the eve of his inauguration, the nation's first Indian leader and fierce critic of the United States called his landslide election a victory for the world's indigenous populations.
His win, he said, was evidence that poor countries could challenge rich, developed nations.
"With the unity of the people, we're going to end the colonial state and the neoliberal model," said the leftist Morales, who spoke mostly in Spanish.
Morales also set a target date of 2 July for electing members of a Bolivian constituent assembly to rewrite the country's constitution, an idea proposed by former president Carlos Mesa.
He has pledged constitutional reforms to benefit the country's Indian majority, reverse free-market policies and increase state control of natural resources such as natural gas, tin and silver.
Tens of thousands of supporters
cheered Morales at the ceremony
Spectators chewing coca leaves and wearing brightly coloured ponchos gathered at the archaeological remains of the Tiwanaku civilization that flourished between 500 BC and the 13th century near the shores of Lake Titicaca.
Equality and justice
When Morales arrived many shouted "Viva Evo! Viva Bolivia!".
Others waved rainbow-coloured flags representing 500 years of Indian resistance - first against Spaniard domination, and then against nearly 200 years of poverty in a country with a deep dividision between rich and poor.
Many of Bolivia's Indians, representing a majority of its 8.5 million citizens, contend that the European-descended elite is responsible for continued repression.
Morales walked barefoot up the Akapana pyramid, donning the tunic and a cap decorated with traditional yellow and red Aymara patterns.
Then he was showered with white flower petals, and blessed by Indian priests, the cultural inheritors of this pre-Incan city whose people mysteriously disappeared without a written record long before the Spaniards took control of much of South America.
Accepting a baton adorned with gold and silver symbolizing his Indian leadership, he put on sandals and descended the pyramid to address the crowd gathered in front of the Kalasasaya temple.
Morales thanked Mother Earth and God for his victory and promised equality and justice as he closed the ceremony. He also praised the iconic guerrilla leader Ernesto "Che" Guevara, killed in Bolivia while trying to mount an armed revolution, and 18th century Indian leader Tupac Katari, who tried to capture La Paz from the Spanish.
Without naming countries or companies, Morales blamed American-style capitalism for many of Bolivia's current problems.
"The time has come to change this terrible history of looting our natural resources, of discrimination, of humiliation, of hate," Morales said.
"The time has come to change this terrible history of looting our natural resources, of discrimination, of humiliation, of hate”
Evo Morales, the Bolivian president
He also pledged to change what he said was an international economic order dominated by developed countries and one that kept poor nations trapped in misery.
"We need the strength of the people to bend the hand of the empire," Morales said.
Morales later headed back to La Paz, where the US Embassy said Bolivia's next president would meet Assistant Secretary of State Thomas Shannon.
Shannon heads the State Department's Western Hemisphere affairs bureau.
Cuba's Fidel Castro, a confidant of Morales, was not attending the inauguration, but sent his vice-president to the swearing-in.
On Sunday, Morales will be surrounded by dignitaries, but he planned to wear something more casual - exactly what, has not been revealed. During his pre-inauguration world tour, he was applauded and criticised for wearing the same striped sweater to meet presidents and royalty.
A close ally of Hugo Chavez, Venezuelan president, and his socialist-inspired policies, Morales has promised to fight corruption and poverty, and secure more profits from Bolivia's vast natural gas reserves.
"This struggle won't stop, this struggle won't end," he said.