The inauguration, which was attended by foreign dignitaries including US Secretary of State John Kerry and Australian Prime Minister Tony Abbott, capped a remarkable rise for a softly-spoken politician who was brought up in a riverside slum.
Widodo, known by his nickname Jokowi, worked his way up through local politics before securing the presidency in July following a close race against controversial ex-general Prabowo Subianto.
He is the country's first president from outside an ageing band of political and military figures who have ruled the world's third-biggest democracy since the end of the three-decade Suharto dictatorship in 1998.
But there are fears that a hostile parliament dominated by parties that opposed Widodo at the election, and the new leader's status as a political outsider, could make it hard for him to push through reforms aimed at reviving Southeast Asia's top economy and helping society's poorest.