Governor ESL Narasimhan administered the oath of office and secrecy to Chandrababu at 7.27pm, the auspicious "muhurtam" set for the occasion.
Several Union ministers, chief ministers of various states and senior leaders of BJP attended the swearing-in ceremony.
Naidu took oath in the name of God in Telugu amidst thunderous cheers by party workers.
Some ministers were also sworn in on the occasion. Chandrababu paid obeisance to the statue of Telugu Talli (reverential mother of Telugus) on the dais before taking oath.
Braving the blistering heat, lakhs of people attended the unprecedented grand ceremony on a sprawling 70-acre open site opposite Acharya Nagarjuna University.
Union ministers Rajnath Singh, M Venkaiah Naidu, Ananth Kumar, Kalraj Mishra, Prakash Javadekar, Nirmala Sitharaman attended the function.
Chief ministers Parkash Singh Badal of Punjab, Manohar Parikar of Goa, Vasundhara Raje Scindia of Rajasthan, Raman Singh of Chhattisgarh, TR Zeling of Nagaland were also present along with senior BJP leaders LK Advani, Murli Manohar Joshi and several others.
Deputy chairman of Rajya Sabha PJ Kurien and Punjab deputy chief minister Sukhbir Singh Badal were also present.
Bollywood actor Vivek Oberoi and Telugu film stars Pawan Kalyan, NTR Junior and Kalyan Ram also attended the ceremony.
Art of Living guru Sri Sri Ravi Shankar, badminton star Pullela Gopichand, top industrialists like G Mallikarjuna Rao of GMR Group and a host of other VIPs attended the ceremony.
Chandrababu's wife Bhuvaneswari, son Lokesh, daughter-in-law Brahmani and other relatives were also present.
Earlier on Sunday, Prime Minister Narendra Modi assured Naidu "all possible help" and hoped that his administrative experience will be great asset to the state.
He said Naidu's administrative experience and commitment to development will be a great asset in taking Andhra Pradesh to newer heights.
"The Centre is committed to extending all possible help to the people and government of Andhra Pradesh," Modi tweeted.
He also extended his best wishes to him and his team in "developing the state."
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