The 65-year-old, in power since 1999, is on course to become the longest-serving Russian leader since Joseph Stalin after his victory in March's elections.
Putin won nearly 77 percent of the vote in polls in which his most vocal opponent was banned from running.
He has promised to use his fourth term to revitalise the country's economy. But he also faces a host of delicate international disputes.
"I consider it my duty and my life's aim to do everything possible for Russia, for its present and for its future," Putin said at Monday's swearing-in ceremony, with his hand on the Russian constitution.
Several thousand guests lined the red carpet and filmed Putin on their smartphones as he arrived for the swearing-in ceremony in the ornate Andreyev Hall, part of the Kremlin palace complex.
Among them were US action star Steven Seagal, who has taken up Russian citizenship as well as former German chancellor Gerhard Schroder and Naina Yeltsina, the widow of Putin's late predecessor Boris Yeltsin.
The car that brought him to the inauguration was a black Russian-made limousine -- a change from previous ceremonies when he used a German Mercedes.
"I feel strongly conscious of my colossal responsibility," he said, thanking Russians for their "sincere support" and "cohesiveness."
"We have revived pride in our fatherland," Putin said.
"As head of state I will do all I can to multiply the strength, prosperity and fame of Russia."
Shortly after the ceremony, Putin asked parliament to back a new mandate for outgoing prime minister Dmitry Medvedev, his long time ally, in a move that suggested continuity.