Waseem, a former Member of Provincial Assembly, who is being held at Karachi's central prison on terrorism charges, was brought amid tight security to the Polo Ground to take oath.
Family members of Waseem and MQM leader Farooq Sattar were present at the ground to attend the oath-taking ceremony.
The swearing-in comes amid a massive crackdown on the MQM leaders and its offices across Pakistan for its anti-government tirade. The US has urged Pakistan to not exceed the law while tackling the MQM.
Addressing the ceremony, Waseem thanked all institutions in the country, and chanted "Long live Muttahida, long live Bhutto."
"Despite the problems Karachi has been facing, I ensure that we will work together for the betterment of this city and the province," Waseem said, urging former President Asif Ali Zardari and his son, Bilawal Bhutto, the Pakistan Peoples Party's chair, to set aside all differences with his party.
"I am currently in prison but all charges against me are fake," the mayor said during the ceremony. Waseem announced his decision to move a bail application in court after taking oath.
"The city of lights has suffered already, I will not let it suffer any more," he added.
On winning the mayoral election on August 24, Waseem had said: "It will be written in history because elections have never happened like this ever before."
The tenure of the port city's last elected mayor, Syed Mustafa Kamal, ended almost six-and-half-years ago in February, 2010.
