Iranian President Hassan Rouhani has urged the West to drop sanctions and treat Tehran with respect, during his inauguration speech to parliament.
MPs cheered as he said: "If you want an adequate response, you shouldn't speak the language of sanctions, you should speak the language of respect."
Mr Rouhani, 64, nominated a cabinet that included as foreign minister ex-UN envoy Mohammad Javad Zarif, a moderate.
The US said it would be a "willing partner" if Iran "engages seriously".
The White House said Iran should meet its international obligations and deal with international concern over its nuclear programme.
Mr Rouhani, a former nuclear negotiator who has worked as a diplomat for three decades, won a surprise victory in June's election.
He gained support from reformists by hinting at a more moderate stance than his predecessor, Mahmoud Ahmadinejad.
'Yes' to moderation
In his speech, Mr Rouhani told parliament: "All of those who voted, whether they voted for me, someone else, or even if they didn't vote, all of them are Iranian citizens and have citizenship rights."
He said the people had voted "yes" to moderation and hope. He promised to advance women's rights and freedoms and to reduce the government's interference in people's lives.
He also said he would work to turn around the ailing economy, with inflation currently running at about 40%.
Most experts say the economy was grossly mismanaged under Mr Ahmadinejad.
But it was further crippled by sanctions, which stopped Iran from bringing in hard currency from its main export, oil.
Although Mr Rouhani is president, the final say on policy issues still resides with Supreme Leader Ayatollah Ali Khamenei.
State news agency Irna reported that 11 foreign presidents were among those watching as Mr Rouhani took the oath of office in parliament, the Majlis.
Among the foreign dignitaries attending was senior North Korean official Kim Yong-nam, who held talks with Mr Rouhani on Saturday.
Iran and North Korea have close ties and both face opposition to their nuclear programmes from the West.
Mr Rouhani used to be Iran's chief negotiator on nuclear issues and has held discussions in the past with former European Union foreign policy chief Javier Solana, who is also in Tehran for the swearing-in.
Mr Solana said on his twitter feed that he had known Mr Rouhani since 2000, adding: "It's good to have channels open."
One of the leaders unable to attend was Sudanese President Omar al-Bashir, who is wanted by the International Criminal Court for crimes against humanity.
Saudi Arabia refused to allow a plane carrying Mr Bashir to enter its territory, forcing it turn back to Khartoum.