After taking the oath, Saakashvili watched a parade of soldiers, tanks and heavy artillery roll down Rustaveli Avenue, Tbilisi's main thoroughfare, as fighter jets flew overhead.
"We have to provide a counterweight to the masquerade that is taking place on Rustaveli Avenue," Constantine Gamsakhurdia, an opposition leader told the crowd.
"We will not give up our fight."
Saakashvili told the crowd of thousands of supporters and foreign dignitaries at the inauguration that he wanted his second term to see an improvement in relations with Russia.
Tbilisi and Moscow were frequently at odds during his first term as he moved to bring the former Soviet Union state into Nato and the European Union.
|"Our European orientation is not directed against the interests of any country" |
Mikhail Saakashvili, Georgian president
In the next five years "we will reach out to our friend Russia", Saakashvili said, while vowing to push ahead with his pro-Western policies.
"Our European orientation is not directed against the interests of any country," he said.
Sergei Lavrov, the Russian foreign minister, was among the delegates at the ceremony. He is the highest-ranking Kremlin official to visit Tbilisi since a spy row in 2006.
The Interfax news agency reported on Sunday that Russia was considering lifting sanctions imposed on Georgia.
"We are ready to consider the cancellation of the remaining restrictions," Lavrov was quoted as saying during a meeting with Georgia's Orthodox Christian Patriarch Ilya II.
He said it marked a "not-insignificant step in the development of our relations".
Although the opposition backs Saakashvili's pro-Western policies, it accuses him of authoritarian tendencies and forgetting impoverished Georgians who have been left behind in the free-market reforms he has implemented since the so-called Rose Revolution in 2003.
"My foremost goal is the prosperity of every Georgian family. My goal is to beat poverty," Saakashvili said.
But opposition protesters across the city were convinced that nothing would change if Saakashvili remained president.
"We are tired of the government, it only cares about the privileged," a protester said.
January's snap election was called after Saakashvili ordered police to crush anti-government protests in November.