More than 40,000 spectators, including retired heads of state and the singer Michael Jackson, attended the ceremony held in front of Seoul's National Assembly building. Doves were released into a warm winter sky, drums were beaten and a 21-gun salute was fired at the first inauguration of a South Korean leader drawn from the ranks of the opposition parties.
After the ceremony, mud which had been brought in from the different provinces of South Korea was used to plant a "tree of reconciliation", and a carnival procession of floats, dancers, musicians and vegetables paraded through the streets of Seoul. For all the festive arrangements, Mr Kim was frank about the "stupefying situation" facing his new government and the economic suffering that lies ahead.
"We are faced with a crisis which could bankrupt our country," the President warned.
"Consumer prices and unemployment will rise this year. Incomes will drop and an increasing number of companies will go bankrupt. All of us are being asked to shed sweat and tears".
Since the currency turmoil first hit East Asia last summer, the South Korean won has lost half of its value, forcing the closure of thousands of companies and a humiliating appeal for a $60bn (pounds 38bn) bail-out from the International Monetary Fund (IMF).
But unlike Indonesia, the other big victim of the crisis in Asia, the situation in South Korea has stabilised this year, thanks in part to Mr Kim's reassuring pledges to abide by the terms of the IMF agreement and not blunt its stipulations as a result of domestic pressure from trade unions and big business. "Democracy and the market economy are two sides of a coin or two wheels of a cart: if they were separated we could never succeed," Mr Kim said, in an implicit rebuke to such leaders as Indonesia's President Suharto, who wield authoritarian power and suppress political opponents in the name of "Asian values".
"Every nation that has embraced both democracy and a market economy has been successful. Nations ... that have rejected democracy and accepted only a market economy have ended up suffering disastrous setbacks".
Mr Kim's half-hour speech, outlining the plans of his "government of the people", contained a check-list of the grave problems facing South Korea which, less than a year ago, ranked as the world's 11th-largest economy. He promised to decentralise government, attract more foreign investment, and reform South Korea's huge conglomerates. It is their thirst for expansion at the expense of consolidation which is thought to have contributed to the country's economic plight. Mr Kim promised few specific measures, but opinion polls suggest the public has high hopes for him, after the moribund and discredited leadership of his predecessor, Kim Young Sam.
One subject on which the new President did make detailed proposals was North Korea, and the painful division which has existed on the peninsula since the end of the Korean War in 1953.
Mr Kim proposed an exchange of envoys between Seoul and the North Korean capital, Pyongyang, and said he was ready to hold a summit meeting at any time.
"The Cold-War style North-South relations which for more than half a century have not allowed members of separated families to find out even whether their own parents and brothers and sisters were alive or dead ... must end as soon as possible," he said.