"This is the greatest moment in my life," Seehofer said shortly before his swearing-in ceremony in the Bavarian state parliament.
The legislature elected Seehofer by 104 votes to 71, four weeks after his Christian Social Union (CSU), the Bavarian sister party to Chancellor Angela Merkel's Christian Democrats, recorded its worst result in half a century.
The party lost 17 points and the absolute majority it had enjoyed in Bavaria since the 1960s in the September 28 poll, forcing it to seek a coalition partner.
Over the weekend the CSU sealed a deal to govern with the pro-business Free Democrats and tapped Seehofer to lead the party with 90 percent of the vote. The CSU is a key ally for Merkel's conservatives, who will need its strong backing once again to retain power in next year's general election. Without its support in 2005, Merkel would not have won the chancellery.
Seehofer, 59, replaced hardliner Günther Beckstein as Bavarian state leader and Erwin Huber as CSU party chief after both were forced to step down after the election. Seehofer said he would announce his successor as federal agriculture and consumer affairs minister, whom the CSU has the right to name, on Thursday.
A former health minister under Helmut Kohl, Seehofer narrowly missed out on becoming party leader last year after revelations of an extra-marital affair that produced a child out of wedlock lost him support among the CSU's overwhelmingly Catholic rank-and-file.