Lugo, who takes over from Nicanor Duarte, the outgoing president, took the oath of office in a ceremony in the capital, Asuncion.
The ceremony was attended by several Latin American leaders, including Hugo Chavez, the Venezuelan president, and Evo Morales, the Bolivian leader.
Lugo, who has pledged to clean up corruption and transform Paraguay's impoverished society acknowledged "it won't be easy, but it's not impossible".
"Today is the end of an exclusive Paraguay, a segregationist Paraguay, a notoriously corrupt Paraguay," he said.
"Today begins the history of a Paraguay whose authorities will be implacable with thieves."
Source : Al Jazeera
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