Speaking at her inauguration attended among others by Laura Bush, the US first lady and Condoleezza Rice, the US secretary of state, Sirleaf promised Liberians a "fundamental break" from Liberia's violent past.
"We know that your vote was a vote for change, a vote for peace, security ... and we have heard you loudly," Sirleaf told Liberians in her inaugural speech on Monday.
"We recognise this change is not a change for change's sake, but a fundamental break with the past, therefore requiring that we take bold and decisive steps to address the problems that have for decades stunted our progress," she said.
"We know that your vote was a vote for change, a vote for peace, security ... and we have heard you loudly"
Ellen Johnson Sirleaf,
Sirleaf takes charge of a ruined nation struggling for peace after a quarter-century of coups and war. Speaking for the first time as president, she also promised to stamp out corruption to secure the trust of skeptical foreign donors whose aid is desperately needed to rebuild.
Sirleaf, wearing a cream and gold dress, was sworn in at a colourful open-air ceremony to the loud cheers from hundreds of foreign dignitaries and Liberians, including women wearing dresses emblazoned with their new president's portrait.
"Let us begin anew, moving forward into a future that is filled with hope and promise," Sirleaf said.
The new president vowed to fight corruption, which experts say has fuelled decades of instability, and to uphold a foreign donor-backed governance and economic management programme (GEMAP) that will oversee state spending.
"We will accept and enforce the terms of GEMAP. We will ensure competence and integrity in the management of our resources," said the Harvard-trained 67-year-old economist.
In a statement, UN Secretary-General Kofi Annan congratulated Sirleaf, saying she had a "historic mandate to lead the nation towards a future of lasting peace and stability".
For many Liberians Sirleaf's
inauguration is a sign of hope
Two US Navy warships were visible offshore for the first time since the war ended in 2003, in a rare show of support.
Security was tight, with armed UN peacekeepers surveying the scene with binoculars from atop surrounding buildings.
Sirleaf will serve a six-year term as head of Africa's oldest republic, founded by freed American slaves in 1847.
The country has known little but war, however, since a rebel group led by Charles Taylor plunged the country into chaos, invading from neighbouring Ivory Coast in 1989.
Taylor became president in 1997 but stepped down and was exiled to Nigeria as part of the 2003 peace deal brokered as rebels pressed on the capital.
He is now wanted on war crimes charges by a UN-backed war crimes court in Sierra Leone for his role in backing a brutal rebel group during that country's 1991-2002 civil war.
Rich in diamonds, iron ore and timber, Liberia was relatively prosperous and peaceful until a 1980 coup saw illiterate Master Sergeant Samuel Doe seize power and order cabinet ministers tied to poles in their underwear and executed.
Harvard-educated Sirleaf was finance minister at the time, but was spared, she told The Associated Press in a recent interview, "by the grace of God".
Twice imprisoned in the 1980s by Doe's junta, Sirleaf fled into exile.
Sirleaf inherits a nation in tatters. The capital has no running water or electricity, and unemployment is an astounding 80%.