Lee Myung-bak took his oath in front of about 60,000 people, including the US Secretary of State and the Japanese Prime Minister. The businessman has promised to revive the economy and to follow a hard line towards North Korea.
A military band performs at the inauguration of President Lee Myung-bak
Born in 1942, Lee Myung-bak grew up in a small town on Korea's eastern coast. Born into a poor family, his childhood was overshadowed by the Korean war and he had to struggle for survival. His first job was helping his mother sell ice-cream.
Lee is proud of his achievements: "It seems to me as if I've led a slightly different life -- two films have even been made about me. I started off my life as a stable boy and a street sweeper as part of the working class and later I became CEO of a leading Korean firm and the mayor of Seoul."
Lee's rags-to-riches story has struck a chord with many Koreans. Economic success and professional achievement remain key driving factors in Korean society. This was made very clear during the election campaign, which was dominated by one issue -- the economy.
Pragmatic business approach
In terms of sheer figures, South Korea is doing well but many people felt that the former president hadn't concentrated enough on the economy. They thought a pragmatic businessman such as Lee Myung-bak would be able to work wonders with the country's economy just as had done with the leading motor company Hyundai.
Lee joined Hyundai in the 1970s and helped turn the firm into one of Korea's most significant companies. He also made millions. His critics accused him of using illegal methods. The opposition had hoped corruption charges would prevent him from running in December's elections.
But on Dec. 5, 2008 he was cleared of all such charges by the federal prosecutor: "No evidence was found that Mr Lee had taken advantage. Despite the investigation there was no proof that the candidate had owned the controversial company "DAS" at the time and therefore no allegations can be confirmed."
Not much interest in corruption charges
Ordinary South Koreans on the street failed to show much interest in the allegations. This young man speaks for many when he says: "I'm not interested in these corruption and bribery allegations. Lee Myung-bak has been cleared. The important thing is that he will do a lot for the economy in the future."
Although reviving the economy is top of Lee's priorities, he has another challenge to meet -- North Korea. He has promised to tow a hard line towards Pyongyang and has nominated an outspoken critic of the outgoing government's policies as Unification Minister.
However, he has made clear that if Pyongyang abandons its nuclear programme once and for all it will be suitably rewarded with aid and support.
South Korea goes to the polls again in April to elect a new parliament. By that time, Lee will have to convince the electorate that he and his party are on the right track.
But experts have expressed their doubts that he will be able to meet his promises, given the current economic crisis being faced by the world as a whole.