Governor ESL Narasimhan administered the oath of office and secrecy to the 46-year-old leader, whose party emerged victorious in 151 seats in the 175-member strong state assembly.
The YSR Congress decimated the TDP headed by N Chandrababu Naidu, who became the first chief minister of the state after it was bifurcated to carve out Telangana five years ago.
The YSRC also won 22 of the 25 Lok Sabha seats in the state in the recently concluded polls.
Reddy took the oath in Telugu at 12.23 pm amid thunderous cheers by scores of party leaders and workers in a brief ceremony at the IGMC Stadium in Vijayawada.
Only Reddy took oath on Thursday and his council of ministers is expected to be sworn in on 7 June.
Telangana Chief Minister K Chandrasekhar Rao, DMK chief M K Stalin and Puducherry Health Minister Malladi Krishna Rao were the special guests.
Telangana Deputy Chief Minister Mahmood Ali, Assembly Speaker Pocharam Srinivasa Reddy, minister Talasani Srinivasa Yadav also attended the swearing-in ceremony.
Reddy’s mother and YSRC honorary president Y S Vijayamma, his wife Bharati and sister Sharmila and other members of the family were specially seated on the dais