Police said up to 500,000 people, many of them wearing the Aquino family's signature yellow, turned up for the festival-style inauguration ceremony at a seaside park in Manila.
The crowd roared and waved yellow flags as the 50-year-old bachelor Aquino, wearing a traditional Filpino "barong" shirt, took his oath in front of a Supreme Court judge.
"I think he can reduce corruption and improve governance," high school teacher Terlito Malaya, 52, said as he waited for Aquino to be sworn in.
"Poverty is also a very big problem and needs a permanent solution... but no-one should think right now that he will fail."
Aquino rode to the country's biggest election victory on May 10 on a pledge to fight woeful graft and poverty that he said thrived during the nearly 10-year reign of outgoing president Gloria Arroyo.
Another crucial factor was his status as the son of Philippine democracy heroes Benigno and Corazon Aquino, who remain revered for their efforts to overthrow dictator Ferdinand Marcos.
His mother, Corazon, earned a reputation as an incorruptible leader during her six-year term as president following the "people power" revolution that toppled Marcos in 1986.
Her death from cancer last year reignited national support for the family, which in turn lifted her son from political lightweight after 11 years as a low-profile member of parliament to presidential frontrunner.
Aquino admitted to feeling some anxiety on Tuesday as he named his cabinet and put the finishing touches to his first speech as president, in which he will outline how he intends to get the job done over his six-year term.
"It will be what sets the goalposts," he said of the speech, which will air live on national television.
His speech was due to take place shortly after the swearing in ceremony.
After promising to eradicate poverty during the campaign, Aquino has been careful to play down expectations, insisting that he is not Superman and that he is hoping to merely lay a solid foundation for his successor in 2016.
However he has also announced some headline-grabbing initiatives, including on Tuesday naming a retired Supreme Court chief justice to lead a Truth Commission that will probe and possibly prosecute Arroyo for alleged graft.
Aquino also pledged to scrutinise every project listed in the national budget to make sure taxpayers money is not being lost to corruption, adding he suspected Arroyo had painted a falsely optimistic picture of the economy.
"The first order of business will be for everybody (in the cabinet) to review their particular areas of concern," Aquino said Tuesday.
"We will have to study the lay of the land, study what the conditions are bereft of political spin."
Amid this backdrop, a fascinating part of Wednesday's events saw Aquino escort Arroyo in a limousine from the presidential palace to the Rizal Park venue for the oathtaking ceremony and transfer of power.
They shook hands and smiled for the press cameras at the presidential palace, but Aquino avoided making eye contact in their awkward encounter.
Aquino also said Tuesday he wanted peace talks to end decades-long communist and Muslim separatist insurgencies.
Another priority was to improve a judicial system where just 18% of criminal cases lead to convictions and a court verdict takes six years.
"Justice is really an aspiration rather than a reality," he said.
East Timor President Jose Ramos-Horta and US Trade Representative Ron Kirk were among the foreign dignitaries to attend the inauguration.
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