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Yoweri Museveni, 81, won disputed elections in January to extend his 40-year rule.
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Heavy security, including armoured tanks, were deployed in the capital, Kampala, ahead of the inauguration in what police said were measures intended to maintain public order.
Museveni was declared the winner of the election with more than 70% of the vote, with his term expected to end in 2031.
His main rival, pop star turned politician Bobi Wine, rejected the result, saying the poll was marred by "ballot-stuffing". Election officials denied the allegation.
The 44-year-old opposition leader, whose real name is Robert Kyagulanyi Ssentamu, fled the country after the election, saying he feared that "the regime wanted to eliminate me".
Museveni first came to power as a rebel leader in 1986 but since then has won seven elections.
He is among the few African leaders in power for more than 40 years. Others include Congo-Brazzaville's Denis Sassou Nguesso, Equatorial Guinea's Teodoro Obiang and Cameroon's Paul Biya.
The swearing-in ceremony was held at the Kololo Independence Grounds in Kampala. The government declared the day a public holiday.
African leaders who attended the ceremony included Tanzania's President Samia Suluhu Hassan, the Democratic Republic of Congo's Félix Tshisekedi, South Sudan's Salva Kiir and Somalia's Hassan Sheikh Mohamud.
Uganda has one of the world's youngest populations, with majority of the people having known no other president.
Museveni has not indicated when he intends to retire, but analysts say this is likely to be his last term.
His 51-year-old son, Gen Muhoozi Kainerugaba, the military chief, has been widely tipped as a potential successor.
However, Kainerugaba has increasingly faced criticism for the way he uses social media to threaten the opposition, including Wine.
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