After a first ride in the popemobile before tens of thousands of people in St Peter's Square on Sunday, Leo was formally installed as the 267th pontiff of the Roman Catholic Church and sovereign monarch of Vatican City at an outdoor mass.
Well-wishers in the crowd waved US and Peruvian flags, with people from both countries claiming him as the first Pope from their nations.
Born in Chicago, the 69-year-old pontiff spent many years as a missionary in Peru and also has Peruvian citizenship.
Crowds chanted "Viva il Papa" (Long Live the Pope) and "Papa Leone", his name in Italian, as his distinctive, open-topped popemobile weaved around St Peter's Square.
Robert Prevost, a relative unknown on the world stage who only became a cardinal two years ago, was elected Pope on May 8 after a short conclave of cardinals that lasted barely 24 hours.
He succeeded Francis, an Argentine, who died on April 21 after leading the church for 12 often turbulent years during which he battled with traditionalists and championed the poor and marginalised.
US Vice President JD Vance, a Catholic convert who clashed with Francis over the White House's hardline immigration policies, led a US delegation alongside Secretary of State Marco Rubio, who is also Catholic.
Vance briefly shook hands with Ukrainian President Volodymyr Zelenskiy at the start of the ceremony.
The two men last met in February in the White House, when they clashed fiercely in front of the world's media.
In his sermon, read in fluent Italian, Leo said he would not shrink before modern challenges as leader of the world's 1.4 billion Roman Catholics and would continue the legacy of Pope Francis on issues such as combating poverty and protecting the environment.
Leo said the cardinals who elected him had chosen someone "capable of preserving the rich heritage of the Christian faith and, at the same time, looking to the future in order to confront the questions, concerns and challenges of today's world".
Francis's papacy left a divided church, with conservatives accusing him of sowing confusion, particularly with his extemporaneous remarks on issues of sexual morality such as same-sex unions.
Saying he was taking up his mission "with fear and trembling", Leo used the words "unity" or "united" seven times and the word "harmony" four times.
"It is never a question of capturing others by force, by religious propaganda or by means of power. Instead, it is always and only a question of loving, as Jesus did," he said in an apparent reference to a war of words between conservative and progressive Catholics.
"Brothers and sisters, I would like that our first great desire be for a united church, a sign of unity and communion, which becomes a leaven for a reconciled world."
Conservatives also accused Francis of being a heavy-handed ruler who belittled their concerns and did not consult widely before making decisions.
The ceremony was attended by world leaders including Australia's Prime Minister Anthony Albanese, the presidents of Peru, Israel and Nigeria, the prime ministers of Italy and Canada, German Chancellor Friedrich Merz and European Commission President Ursula von der Leyen.
Spanish King Felipe and Queen Letizia also took their place in VIP seats near the main altar.
Leo received two symbolic items as part of the ceremony: a liturgical vestment known as a pallium, a sash of lambswool representing his role as a shepherd, and the "fisherman's ring", recalling the first Pope, St Peter, who was a fisherman.
The ceremonial gold signet ring is specially cast for each new Pope and can be used by Leo to seal documents.
It shows St Peter holding the keys to heaven and will be broken after his death or resignation.
