Pinera, who was president from 2010-2014, vowed to revive an economy that has slumped under years of center-left rule and called for austerity and support for the shrinking middle class in the Latin American country.
He said his government would perform "major surgery" on the public health care system.
"The state must be austere and efficient in the use of public resources... and must never be captured by bureaucracy, corruption or political operators," Pinera said.
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"To make progress on all these goals, it is fundamental we counter the stagnation of recent years, restoring fiscal equilibrium as well as our leadership, dynamism and ability to grow," Pinera said in a speech from a balcony at the presidential palace in the capital Santiago.
Leaders from neighboring Latin American countries, including Argentina, Bolivia, Mexico and Peru attended the inauguration ceremony in the coastal city of Valparaiso. Also present was the former King of Spain Juan Carlos.
Economy recoveringThe 68-year-old Harvard-trained economist, who made his fortune introducing credit cards to Chile in the 1980s, was elected in December with a strong mandate.
Pinera is entering office at a time when Chile's economy is showing signs of rebounding. Rising copper prices have boosted the country's exports, helping shore up government revenues.
"The good times are coming," his supporters chanted after he was sworn in.
But Pinera faces a challenge of herding his own sometimes fractious coalition, which includes parties that backed the dictatorship of Gen. Augusto Pinochet from 1973 to 1990.
He will also face stiff opposition from the leftist coalition that has vowed to fight his plans to lower taxes and amend Bachelet's progressive policies.
ap/jm (Reuters, AFP, AP)
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