In an attempt to make a smooth transition from the Abe government, Fukuda has reinstated much of the same cabinet, although some members have shifted ministries.
Fukuda has a reputation as an experienced deal-maker but faces daunting challenges as he takes up the reins of the of the world's second-largest economy.
His appointment comes after the first leadership split in the Japanese parliament in almost 10 years.
The Japanese parliament, or Diet, is split with the opposition in control of the upper house, and public support for Fukuda's ruling Liberal Democratic party is at rock-bottom.
In Tuesday's vote the upper house of the Diet backed Ichiro Ozawa, the leader of the main opposition Democratic party, but under Japan's constitution the vote by the lower chamber for Fukuda takes precedence.
|Fukuda was backed by the LDP-dominated |
lower house of Japan's parliament [Reuters]
Following the vote Ozawa repeated growing calls for the new prime minister to hold an early election.
"The only thing to be done is to seek the will of the people in a lower house election," he said.
Fukuda's first order of business, though, will be pushing through parliament a controversial extension to a Japanese naval mission in support of US-led forces in Afghanistan in a move the opposition has vowed to defeat.
Japanese tankers have been refuelling coalition ships in the Indian ocean since 2001, and the US – Japan's top ally and protector - has been pushing for an extension of the operation.
Democratic party members have vowed to block the extension, saying the Afghanistan mission goes beyond the purely defensive role of the Japanese navy.
The issue had been a key stumbling block for Abe who faced harsh criticism for abruptly resigning amid the parliamentary battle over the extension.
Before Tuesday's vote Abe emerged from a Tokyo hospital, where he has been receiving treatment for a stress-related stomach illness, to officially dissolve his cabinet.
"I want to extend my apologies to the people for not being able to complete my duties," he said in a statement read to reporters following his cabinet's final meeting.