Known as "the Mass of the beginning of the Petrine ministry," the ceremony was solemn but also joyous, and began with Pope Francis emerging from an open-topped popemobile amid long applause.
Wearing his papal whites, Francis waved, smiled, kissed babies and gave informal thumbs-up to the ecstatic crowds as he long toured the sun basked square.
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At a certain point, he broke with protocol and climbed down the car to kiss a disabled man amid cries of "Viva il Papa" - long live the pope..
Dozens of blue and white flags from Francis' native Argentina, as well as from countries all over the world fluttered above the crowd, while pilgrims chanted the pope's name in Italian - "Francesco, Francesco!"
Sitting on a red and gold throne behind the altar on the steps of St. Peter's Basilica, the former Cardinal Jorge Mario Bergoglio was presented with the Fisherman's Ring and the pallium, a white wool stole embroidered with five silk crosses, symbols of his role and power as the new leader of the world's 1.2 billion Catholics.
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For the Mass, Francis wore plain white vestments, trimmed with gold and brown, and simple black shoes, in contrast to Benedict's famous handmade red loafers.
He used the same pallium as his predecessor, Pope Benedict XVI, while the ring - known as the fisherman's ring, as Peter was a fisherman before an apostle - had to be newly created for him.
According to tradition, Fishermen's Rings were used by pontiffs to put their official wax seals on documents. At a pope's death, the ring is destroyed with a hammer or melted or scratched, so that no fake documents can be made in the pope's name.
In line with his humble style, pope Francis chose a simple, gold-plated silver ring.
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Modeled on a ring designed by Italian sculptor Enrico Manfrini, who died in 2004, for Pope Paul VI, it was chosen by Francis out of three ring models presented to him, Father Federico Lombardi, the Vatican spokesperson, said.
It shows a bearded and haloed St. Peter holding a pair of keys - thus capturing the moment Peter was given the keys to heaven.
"Amid so much darkness, we need to see the light of hope and to be men and women who bring hope to others," Francis said in the homily.
"Don't be afraid of goodness or even tenderness," he added.
He called for the defense of the weakest in society and of the environment, and urged the world leaders to be "protectors of one another and of the environment."
"Let us not forget that hatred, envy and pride defile our lives. Being protectors, then, also means keeping watch over our emotions, over our hearts," he said.
Among the multitude of pilgrims, 130 delegations from around the world, including six sovereigns and 31 heads of state took their seats for the open-air service.
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The guest list included U.S. Vice President Joe Biden, Argentine President Cristina Fernández de Kirchner, German Chancellor Angela Merkel and controversial Zimbabwean president Robert Mugabe.
Lombardi rejected criticism for Mugabe's presence, remarking that it is not the policy of the Holy See to make invitations.
"Those who wish to come are welcome, no one is refused," he said.
Religious leaders covered a broad range, and included 33 Christian churches, 16 Jewish leaders, as well as Muslim, Buddhist and Sikh leaders.
The ecumenical patriarch of Constantinople, Bartholomew I, also participated. It's the first time the spiritual head of Orthodox Christians attend a papal inauguration since the Great Schism between western and eastern Christianity in 1054 .
"This pope is like one of us. We are so tired of a pompous, scandal hit church. Now we have a pope who takes inspiration from St. Francis," Luisa Marchetti, a pilgrim from Sanremo, told Discovery News.
"I am confident he will change things dramatically and for the best.
Let's hope they let him do that," she added.
Although Pope Francis has been winning hearts with his humble, warm and direct style, he is still criticized from leftists at home for failing to speak out during Argentina's dictatorship.
The Vatican has firmly denied all claims, saying that on the contrary he protected lives during the 1976-1983 regime.
The newly installed pontiff will have to face huge challenges within the Roman Catholic Church. A global crisis of faith, a dysfunctional church administration, the sex abuse and the Vatileaks corruption scandals are among the main issues.