His wife Rosario Murillo's elevation to vice president positions her to become president if Ortega leaves office before his term is out.
The ex-rebel leader has ruled Nicaragua for 20 of the past 37 years. His new mandate, delivered in a landslide November election victory, will see him in office until 2022.
His wife Rosario Murillo's elevation to vice president -- she was already his official spokesperson and the public face of his government -- positions her to become president if Ortega, 71, leaves office before his term is out.
Heavy security was evident ahead of the inauguration ceremony in the capital Managua, with the deployment of elite police units backed by dog handlers and the closure of surrounding roads.
VIPs attending included Taiwanese President Tsai Ing-Wen, Bolivian President Evo Morales and El Salvador's leader, Salvador Sanchez Ceren.
The absence of other Central American heads of state underlined the rocky state of Ortega's relations with his neighbors.
The Nicaraguan leader has instead courted nations with an anti-US bent, including Russia and Venezuela.
A North Korean delegation headed by a senior political and military official, Choe Ryong Hae, also was attending Ortega's swearing-in ceremony.