The 37-year-old Khandu, son of former Chief Minister Dorjee Khandu, was administered the oaths of office and secrecy by acting Governor Tathagata Roy at a ceremony in the Durbar Hall of the Raj Bhavan here.
On the occasion, legislator Chowna Mein also took oath as Deputy Chief Minister.
Speaking to reporters after the ceremony, Khandu said age is never going to be an issue in his governance and he will run the state administration very well if he has the support of all his legislators.
Former Chief Minister Khaliko Pul said: "I wish all the best to Pema Khandu... we'll co-operate with him for the development of Arunachal Pradesh."
Present at the ceremony were former Chief Minister Nabam Tuki and Speaker of the state legislative assembly Nabam Rebia, besides senior Congress leaders.
Tuki resigned from his post to make way for Pema Khandu in a bid to get the support of the rebel legislators who had defected from the Congress to unseat Tuki.
Earlier, Tuki resigned as Congress Legislature Party (CLP) leader, and proposed the name of Khandu as the next CLP leader.
The proposal was supported by all the 44 legislators, including 15 Congress and 29 dissident Congress legislators who had joined the People's Party of Arunachal (PPA) in February.
The 44 legislators also include former CM Kalikho Pul, who unseated Tuki and became the Chief Minister in February.
Khandu, who has passed out from Hindu College of Delhi University, started his career in the construction business and played a vital role in assisting his father Dorjee Khandu in his developmental initiatives for the state.
The tragic death of his father, in a chopper crash in 2011, compelled Pema Khandu to enter politics to keep the political lineage of his family alive. He won from his father's constituency -- Mukto -- uncontested.
He held the portfolio of Water Resource and Tourism in the erstwhile cabinet of Nabam Tuki. However, he resigned in 2015 after he developed differences with Tuki.
Khandu later joined the dissident faction of the Arunachal Pradesh Congress led by Kaliko Pul and supported Pul in toppling the Tuki government in February this year.
He came to the forefront of Arunachal Pradesh politics only last Wednesday when the Supreme Court verdict restored the Congress government in the state terming the decision of Governor J.P. Rajkhowa to advance the session of the state assembly in January this year as violative of the Constitution.
The apex court directed that status quo ante in Arunachal Pradesh be restored as it prevailed on December 15, 2015.
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