Beijing-sceptic Tsai took the oath of office at the presidential palace in Taipei after winning a landslide victory in January signalling the end of an eight-year rapprochement with China.
Public support for outgoing president Ma Ying-jeou plunged as voters felt he moved too close to Beijing, which still sees the island as part of its territory.
Tsai raised her right arm as she read the oath in front of Taiwan’s national flag while celebrating crowds watched the ceremony on big screens outside.
She then received the seal of the Republic of China — Taiwan’s official name — and the presidential seal.
Tsai accompanied Ma out of the presidential office as the outgoing leader shook hands with smiling staff and a brass marching band paraded.