The Hungarian parliament elected Magyar on Saturday, with the politician backed by 140 of 199 MPs.
Magyar defeated nationalist-populist Orban after 16 years in power in an April 12 election landslide with 53 per cent of the vote, handing his Tisza party 141 seats - a constitutional majority that will allow him to roll back reforms critics say have weakened democracy.
Orban's Fidesz party secured 39 per cent of the votes and 52 seats.
Foreign investors and Hungarians alike have welcomed Magyar's victory, with the forint hitting four-year highs against the euro, bond yields falling and post-election polls showing more voters backing Tisza.
But any honeymoon for the 45-year-old leader may be short-lived, with the clock ticking to secure billions of euros in suspended European Union funding needed to kick-start the economy and shore up strained public finances.
"Hungarian people have given us a mandate to put an end to decades of drifting," Magyar said.
"They have given us a mandate to open a new chapter in Hungary's history. Not only to change the government but to change the system as well. To start again."
Magyar inherits an economy that only just emerged from stagnation in the first quarter and faces fresh headwinds from surging energy costs linked to the Middle East conflict, which could weigh heavily on Europe's import-reliant economy.
Data released on Friday showed Hungary's budget deficit had reached 71 per cent of the full-year target by April, driven by Orban's pre-election spending.
Magyar has said the deficit could approach seven per cent of output this year.
He has pledged to reaffirm Hungary's orientation towards western Europe.
The NATO member had been seen as drifting towards the Kremlin under Orban, who opposed EU efforts to militarily support Ukraine against Russia's invasion.
Magyar has also said he would suspend public media news broadcasts after taking power, accusing state media and pro-Orban outlets of helping the former leader maintain his hold on power while giving limited airtime to critics.
Magyar, who has pledged a sweeping anti-corruption drive, aims to broker a deal with EU leaders to unlock suspended funding from the bloc by May 25.
with DPA
