"This generation of Americans has been tested by crises that steeled our resolve and proved our resilience. A decade of war is now ending. An economic recovery has begun," he said in his inaugural address to an audience of several hundred thousand in front of the Capitol, and to countless millions watching online or on television.
"America's possibilities are limitless, for we possess all the qualities that this world without boundaries demands: youth and drive, diversity and openness, an endless capacity for risk and a gift for reinvention," he added. "My fellow Americans, we are made for this moment, and we will seize it, so long as we seize it together."
Obama sounded the themes of his recent campaign as a call for using the federal government to shift the benefits of the country and its economy to the poor and middle class and away from the wealthy.
"We, the people, understand that our country cannot succeed when a shrinking few do very well and a growing many barely make it," he said. "We believe that America's prosperity must rest upon the broad shoulders of a rising middle class."
He delivered his address in a festive outdoor ceremony on the steps of the U.S. Capitol.
Obama, 51, was sworn into office just before noon EST on a crisp, sunny day steeped in the tradition and pageantry that mark America's quadrennial transition of power. He was joined by first lady Michelle Obama and daughters, Sasha, 11, and Malia, 14.
Chief Justice John Roberts Jr. administered the 35-word oath - the same one recited by every American president since George Washington - at the West Front of the Capitol, which was draped with red, white and blue bunting. Obama placed his hand on two Bibles -the burgundy velvet-covered Lincoln Bible and Martin Luther King Jr.'s traveling Bible. Obama also had used the Lincoln Bible four years ago, the first to do so since it was used by Abraham Lincoln himself.
Singers Beyonce, Kelly Clarkson and James Taylor performed. Richard Blanco, the youngest ever inaugural poet and the first Hispanic or gay person to recite a poem at the swearing-in ceremony, recited his own work. Civil rights activist Myrlie Evers-Williams delivered the invocation.
Minutes before Obama's oath, Vice President Joe Biden had been sworn in by Associate Justice Sonia Sotomayor, the first Hispanic and fourth female judge to administer the oath. A sea of spectators, from across the city and across the globe, packed the National Mall to watch the first Democrat in seven decades to twice win a majority of the popular vote inaugurated.
Noticeably grayer than when he first took office, Obama had officially started his second term 24 hours earlier, after a brief private ceremony at the White House. Monday's ceremony followed the tradition of delaying the public inauguration a day when the official date prescribed by the Constitution falls on a Sunday.
The nation's 57th inauguration consisted of five days of patriotic parades and fancy balls, solemn prayers and countless for receptions for donors and supporters.
Monday's events were jubilant, but they didn't have the same level of excitement as four years ago, when a young senator promising hope and change became the nation's first black president at a moment of economic peril. Officials estimated that 600,000 to 800,000 people turned out for the festivities, far short of the nearly 2 million in 2009 but an above-average audience for a second-term inauguration.
The Washington subway system reported late Monday morning that ridership into town was about 60 percent of what it was in 2009 at the same time. Still, the crowds led to a maze of street closures, clogged subways, heightened security, the National Mall filled with 1,500 portable toilets and five large-screen TVs and 6,000 members of the National Guard in town assisting with crowd control.
In his second term, Obama faces a political climate that seems to be growing more polarized every day, which no doubt will mean an array of domestic and foreign policy challenges and goals will be difficult to accomplish.
He faces a series of fiscal issues - tax revisions and spending cuts - and pressing international obligations: stopping Iran's nuclear program, navigating an end to the war in Afghanistan and avoiding tensions with China over the administration's "pivot" to Asia.
And he has his own lofty ambitions: rewriting immigration laws, tightening gun regulations and combating global warming.
Obama starts his second term with a higher job approval rating than much of the last four years while Republican leaders and Congress itself are viewed unfavorably and criticized as the least productive in six decades. Afterward, Obama and Biden were headed to the Capitol's Statuary Hall to dine on steamed lobster and hickory grilled bison at a luncheon attended by 200, including Supreme Court justices and congressional leaders.
The tradition dates to President William McKinley in 1897.
Later, the Obamas were to lead an inaugural parade featuring eight official floats, 59 groups, 9,000 people, 1,500 service members and 200 animals the 1.7 miles from the Capitol down Pennsylvania Avenue to the White House.
They'll sit in a reviewing stand adorned with bulletproof glass and the presidential seal in front of the White House. They'll attend two official inaugural balls, one for members of the military and another for the public.
About 40,000 ticketholders were expected to fill the Washington Convention Center to hear Alicia Keys, Usher and Soundgarden and, hopefully, to catch a glimpse of the first couple. The Obamas and Bidens started their day with a prayer service at St. John's Episcopal Church, a few blocks from the White House, where every president since James Madison has worshiped.