The 12 men and four women were sworn in by Morales, some pledging allegiance with a raised left fist, others with a hand on their heart, and a few with both gestures.
"I want zero corruption, zero bureaucracy, no more 'come back tomorrow'. People are tired of this," Morales said.
The new president excluded the technocrats that have traditionally served in the governments of the ruling elite, preferring instead to choose ministers close to grass-roots movements.
"You must comply with the people's mandate, to democratically change the neo-liberal economic model and resolve structural and social problems," Morales said.
Morales and his Movement to Socialism party won 54% of the vote in the election in December, the biggest margin of victory since Bolivia's return to democracy in 1982.
"I want zero corruption, zero bureaucracy, no more 'come back tomorrow'. People are tired of this"
Evo Morales, Bolivian president to his new cabinet
Like other popular leaders in Latin America, he benefited from voters' rejection of US-backed free-market policies and privatisation that flourished in the 1990s but did little to reduce poverty.
Bolivia is South America's poorest country with around two-thirds of the population, mostly from the Indian majority, living below the poverty line.
David Choquehuanca, the new foreign minister, is an Aymara Indian intellectual, while Walter Villarroel, the new mining minister, comes from a mining co-operative and wore his hard hat at the ceremony.
Abel Mamani, a leader from the city of El Alto, will be in charge of water after he organised protests against Suez, the French water company, for poor service.
Morales wants to change
the country's economic model
For the all-important hydrocarbons ministry, which will oversee an increase in state control over Bolivia's natural gas fields, Morales chose Andres Soliz Rada, an energy analyst and journalist.
Soliz Rada has traditionally defended the right of the 9.4 million Bolivians to have access to natural gas before embarking on major export plans.
He will have the job of renegotiating contracts with foreign oil companies that operate in Bolivia.
Morales has said he wants to nationalise the gas industry - a demand of the indigenous majority - but not expropriate the companies' assets.