President who defeated an anti-immigration candidate last year, issued a rallying call for the EU and a warning against populism.
"For me the biggest danger is that we let ourselves be seduced by simple answers, that we fall into nationalism and small-country parochialism. In particular for Austria, which is a very small country," Alexander Van der Bellen said in his inauguration speech.
"Let us not be seduced, let us not be distracted from the work of a united Europe. Maintaining this peace project is worth all our efforts," the 73-year-old, backed by the Greens but who ran as an independent, told parliament in Vienna.
He was finally elected to the largely ceremonial post of presidency in December, defying the hopes of Norbert Hofer of the Freedom Party (FPOe) to become the European Union's first far-right head of state.
His victory followed a divisive and bad-tempered campaign lasting around a year that saw candidates from the two centrist parties that have dominated national politics since 1945 unceremoniously ejected in a first round in April.
Hofer, 45, like other "anti-system" politicians in Europe -- and Donald Trump in the United States -- stoked concerns about immigration and security in the wake of Europe's migrant crisis and a string of Islamist terror attacks in the continent.
Hofer has threatened to fire the government and vowed to "get rid of the dusty establishment", seek closer ties with Russia and fight against the "centralising power" of the EU. He said Islam "has no place in Austria" and opposed gay marriage.
Van der Bellen won a runoff by just 30,000 votes against Hofer, an aircraft engineer turned politician, in May. But the FPOe, formerly headed by the late Joerg Haider, got the result annulled due to procedural irregularities.
A re-run set pencilled in for October had embarrassingly to be postponed because of faulty glue on postal votes. Van der Bellen was finally elected, and by a margin 10 times larger than in May, on December 4.
The victory of Van der Bellen, a former economics professor and ex-leader of the Greens, was greeted with relief by centrist politicians around Europe, many of whom are themselves facing a strong challenge from populist parties.
But Austria's "grand coalition" of Chancellor Christian Kern, comprising his centre-left Social Democrats (SPOe) and the centre-right People's Party (OeVP), remains under severe pressure from the FPOe.
Speculation reached fever pitch earlier this week that the coalition, which is due to govern until late 2018, may throw in the towel and call early elections because of its inability to agree on reforms.
"This government is only concerned with itself and is neglecting our country," FPOe chief Heinz-Christian Strache said on Wednesday as he called for Kern to throw in the towel.
The FPOe has been leading opinion polls for months although a new survey published in the Kronen-Zeitung daily on Thursday put the SPOe and the OeVP much closer behind than thought.