"As president, I swear upon my honour and integrity, before the great Turkish nation and history, to work with all my power to protect and exalt the glory and honour of the Republic of Turkey", Erdogan told parliament as he took the oath of office.
Erdogan's restructuring is the most significant adjustment of the country's political system since the formal establishment of modern Turkey, which supplanted the shattered remains of the Ottoman Empire.
His supporters see them as just reward for a leader who has put Islamist values at the core of public life, championed the pious working classes and built airports, hospitals and schools.
Turkey on Monday removed a law that stipulates a five-year term for the head of the central bank and scrapped a requirement that deputy governors have a decade of experience, deepening worries about the bank's independence under a new presidential system.
The post of prime minister has been scrapped and the president will now be able to select his own cabinet, regulate ministries and remove civil servants, all without parliamentary approval. A senior adviser to Erdogan later said that governors would still be appointed for a five-year term.
Erdogan will face immediate challenges posed by an imbalanced if fast-growing economy and foreign policy tensions between the West and Turkey, a North Atlantic Treaty Organisation member. No major Western leader featured on a list of 50 presidents, prime ministers and other high-ranking guests published by state news agency Anadolu.
After the inauguration, Erdogan will immediately turn to foreign policy, visiting northern Cyprus and Azerbaijan, both traditional first ports of call for a newly elected Turkish leader.
"Most powers will be concentrated in his hands, there will no longer be a prime minister, and nearly none of the checks and balances of liberal democracies will be present".
Hours after he was sworn in with sweeping new powers at a ceremony in the capital of Ankara late on Monday, Erdogan named Berat Albayrak as treasury and finance minister. "In other words, Turkey will be an institutionalized autocracy", former EU Ambassador to Turkey Marc Pierini said. Erdoĝan has repeatedly clashed with strategic allies such as the U.S. and the European Union in recent years over the war in Syria, Turkey's accession to the EU, human rights abuses by Ankara, Europe's failure to support Turkey during the coup attempt, and rising Islamophobia in Europe.
His appointment - and the absence of familiar, market-friendly ministers from the cabinet - has helped send the lira sharply lower.
There are 16 ministers in Erdogan's streamlined new cabinet, which Erdogan has said will be more efficient and act faster.
The lira, which has lost almost a fifth of its value against the dollar this year, dropped almost 3 percent to 4.74 to the dollar minutes after the cabinet announcement. It stood at 4.5655 against the dollar at 1508 GMT, strengthening slightly from Friday's close of 4.5745.
Erdogan has described high interest rates as "the mother and father of all evil", and said in May he would expect to wield greater economic control after the election. Erdogan won an absolute majority in the presidential election with 52.5% of the vote, according to Turkey's Supreme Election Council (YSK).
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