"A lot has happened in the last few years - two political murders, a new political movement, and a dramatic election result in 2002. Yet despite this a lot has been achieved," Balkenende told a news conference after the swearing in.
"The foundations which are necessary for a good period of government are in place ... and we hope we will have some quieter years ahead than we've seen in the last years."
The coalition formed by the Christian Democrats, who led the last government but lost seats in the November elections, brings together both the Labor party, popular with Muslim immigrants, and ChristenUnie, a conservative Christian values party.
The new cabinet also contains the first Muslims to reach the inner core of political power in the Netherlands.
Ahmed Aboutaleb, the son of a Moroccan imam, was sworn in as a state secretary, or junior minister, while Nebahat Albayrak, a Turkish-born lawyer, becomes junior justice minister.
Balkenende's previous coalitions, dominated by the Christian Democrats and free market VVD, had tried to reduce immigration in a country which once had the some of the weakest controls on immigrants and asylum seekers of any European country.
Softer line on immigrants
The new government has already demonstrated its leftwards shift by allowing thousands of illegal immigrants due for deportation to remain in the country.
But it also will keep in place policies designed to force new arrivals to integrate, such as mandatory assimilation classes and Dutch language lessons.
In a policy blueprint issued last month, Balkenende also pledged to continue Dutch participation in international peacekeeping missions, in particular the nearly 2,000 Dutch troops deployed in southern Afghanistan.
He also said the country would continue its role in developing the Joint Strike Fighter with the US and other Nato allies.