Chief Justice John Roberts administered the oath of office on Sunday in the Blue Room of the White House meeting the constitutional requirement that he do so on January 20.
First lady Michelle Obama, daughters Sasha and Malia, and a few reporters witnessed the ceremony.
"I do solemnly swear that I will faithfully execute the office of president of the United States, and will to the best of my ability, preserve, protect and defend the constitution of the United States, so help me God," Obama said in the Blue Room of the White House.
In a tradition honouredsince that date falls on a Sunday, he will repeat the procedure on Monday during a public ceremony at the US Capitol.
Earlier in the day,Joe Biden was sworn in as vice president at the Naval Observatoryby Justice Sonia Sotomayorof the supreme court,making her the first Hispanic judge to ever administer an oath of office for one of the nation's two highest offices.
When Obama first took office as the 44th US president in 2009, many Americans hoped the symbolism of the first black man in the White House was a turning point in the country's deeply troubled racial history.
Obama vowed to moderate the partisan anger engulfing the country, but the nation is only more divided four years later, perhaps as deeply as at any time since the US Civil War 150 years ago.
Political compromisesHis speech on Monday will be the centerpiece of the celebration and a chance to lay out his vision for the next four years.Obamais expected to talk about the need for political compromise where possible, a nod to the divisive fights with the Republican-led House of Representatives over the "fiscal cliff" and raising the US debt ceiling.
The audience is not expected to be as big as in 2009 when a record 1.8 million people assembling at the National Mall to witnesshis firstswearing-in.
However,the turnout is projected at 600,000 to 800,000, with millions more watching on television.
With the public ceremony falling on the national holiday honouring the late civil rights leader Martin Luther King Jr, Obama will also have a chance to draw historic parallels.
We are going to be watching what kind of speech the President makes this time. Probably gone are the soaring rhetoric, Al Jazeeras Patty Culhane said from Washington.
Obama kicked off inauguration events on Saturday, rolling up his sleeves at a school renovation project as he joined in a nationwide day of community service to celebrate King's legacy.
Workers, meanwhile, were putting the finishing touches on viewing stands stretching along the parade route, security barriers were going up, and thousands of police and National Guard troops were being deployed around the city.
Although Obama won re-election decisively in November and his public approval ratings have hovered above 50 per cent, he will usher in his second term facing an array of daunting challenges.
Battles are brewing with Republicans over spending, taxes, the national debt limit, gun control and immigration reform, while overseas he has the tasks of winding down the war in Afghanistan and reining in Iran's nuclear ambitions.