Returning from more than two months of medical treatment in Australia following the assassination attempt in February, he was greeted by thousands of people shouting "Viva President Ramos-Horta".
Huge posters saying "Mr President, Timor is praying and waiting for you" dotted the route to his house near a tourist beach in the eastern part of Dili.
"I'm happy to be back in Timor-Leste," Ramos-Horta told a news conference at the airport.
He was received by Xanana Gusmao, the prime minister, Mari Alkatiri, the opposition leader, and other government ministers and diplomats.
The 58-year-old Nobel Peace laureate, who has always shunned heavy security, said he would remain in his Dili residence despite the advice of security officials to move to a safer location.
He also said he would miss the freedom of mingling freely with his people without having to worry about security issues.
Ramos-Horta came close to dying after he was shot by masked fighters loyal to rebel leader, Alfredo Reinado, in a pre-dawn attack on February 11.
Gusmao, who was attacked an hour later, escaped unhurt.
The president asked the new commander of the rebel soldiers to surrender, saying he had lost patience with the army rebels.
"I ask Gastao Salsinha not to keep staying in the jungle but to surrender soon to the church or the state authorities and face justice," Ramos-Horta said.
|Thousands welcomed the president|
with flags and cheers [Reuters]
"I don't want anybody to die," he said, holding back his tears. "Gastao should surrender to justice and hand over his weapons."
Salsinha took over as rebel chief after Reinado was killed during the assassination attempt.
Al Jazeera's Paul Allen, reporting from Dili, said Ramos-Horta, who was emotional at times, decided to issue a warrant of arrest against Salsinha, admitting he may have been naïve to think he could talk the rebels into coming down from the mountains.
Juan Carlos Arevelo, the deputy commissioner of the UN police, said officers will work with the army and international forces "to provide security for the president at all times in his residence, during his movement and at the office".
"We have a complete convoy to protect the president with the intervention and participation of all security elements in the country," he said.
United Nations forces were criticised for failing to prevent the assassination bid and protect Ramos-Horta.