President Barack Obama told a crowd at the National Mall that America's challenges are real.
"Today I say to you that the challenges we face are real. They are serious and they are many. They will not be met easily or in a short span of time," Obama told hundreds of thousands of people gathered on the National Mall in front of the Capitol.
"But know this, America -- they will be met," he said.
He also vowed to end the divisiveness and partisanship he said was rampant through Washington.
"We come to proclaim an end to the petty grievances and false promises, the recriminations and worn-out dogmas that for far too long have strangled our politics," he said.
In another allusion to Washington's shortcomings, Obama promised to hold accountable anyone who handles taxpayer dollars.
"And those of us who manage the public's dollars will be held to account -- to spend wisely, reform bad habits, and do our business in the light of day -- because only then can we restore the vital trust between a people and their government."
The new president, who hugged civil rights stalwart Rep. John Lewis, D-Georgia, upon walking on stage Tuesday, also hailed the civil rights movement.
"This is the meaning of [America's] liberty and our creed -- why men and women and children of every race and every faith can join in celebration across this magnificent mall, and why a man whose father less than 60 years ago might not have been served at a local restaurant can now stand before you to take a most sacred oath," Obama said.
Wearing a navy suit and red tie, Obama was sworn in using the same Bible that was used in President Abraham Lincoln's inauguration.
The crowd became silent as Obama began his address, with only an occasional "That's right" or "Amen" and scattered applause from the hundreds of thousands in front of him.
Saddleback Church founder Rick Warren delivered the invocation, applauding what he called "a hinge-point in history." Aretha Franklin sang "My Country 'Tis of Thee" before Joe Biden was sworn in as vice president.
Hundreds of thousands of people were on the National Mall -- dancing, singing and vigorously shaking flags -- in anticipation of Tuesday's swearing-in.
"This is America happening," said Evadey Minott of Brooklyn, New York. "It was prophesized by King that we would have a day when everyone would come together. This is that day. I am excited. I am joyful. It brings tears to my eyes."
Minott was at Lafayette Square near the White House, where Obama and his wife, Michelle, had coffee with President Bush and first lady Laura Bush before heading to Capitol Hill.
The Obamas attended a prayer service earlier at St. John's Episcopal Church to kick off the day of events surrounding Obama's inauguration.
As many as 2 million people are expected to crowd into the area between the Capitol, the White House and the Lincoln Memorial as Obama takes the oath of office at noon ET.