Among the key figures sworn in on Tuesday, the Cambridge University-educated Shah Mehmood Qureshi, who will be become foreign minister, Chaudhry Ahmed Mukhtar, another Bhutto loyalist who will be defence minister, and Ishaq Dar, a Sharif ally who will be finance minister.
Among other appointments, Sherry Rehman, a senior Bhutto party spokeswoman, has been chosen minister of information.
As part of the government's new platform, Dar said the economic policies of the previous pro-Musharraf administration would have to be reversed.
"They are handing over the economy in mutilated shape," the new finance minister, who is from Sharif's party, told reporters on Sunday.
The World Bank last week warned that Pakistan faces an economic crisis unless it takes urgent action, especially to address rising prices of foodstuffs, fuel and commodities.
Musharraf has promised to work together with the new government.
"I would like to extend my co-operation to the government... with only one single-minded objective in mind - the progress and development of the country and welfare and well-being of its people", the state-run Associated Press of Pakistan quoted Musharraf as saying.
The new government plans to change the constitution to remove Musharraf's power to dissolve parliament and fire the government.
It has also promised to reinstate judges removed by Musharraf in November to halt legal challenges to his re-election as president the previous month.
Iftikhar Muhammad Chaudhry, Pakistan's deposed chief justice, meanwhile, travelled to the southwestern city of Quetta on Monday to address lawyers as part of a nationwide tour.
Gilani, in his first act of office, ordered Chaudhry and other detained judges released a week ago.
His coalition has pledged to reinstate the judges within 30 days of forming a government. If the judges get their jobs back, they could rule Musharraf's re-election as president in November illegal.