In a session marred by a eurosceptic protest, the German centre-leftist and former bookseller won 409 votes for, with 314 against or blank ballots.
"Great honour and responsibility to be the voice of the Parliament of EU citizens," Schulz tweeted. "We'll keep strengthening this house to the benefit of all."
Marking the start of the parliament's five-year mandate, his re-election by secret ballot was the first order of business since Europe-wide elections on May 25 returned an unprecedented number of eurosceptic lawmakers.
As the session opened, dozens of eurosceptic members stood up and turned their backs on the EU flag as Beethoven's "Ode To Joy", the bloc's anthem, rang across the chamber.
The flag and anthem "are both symbols of our servitude inside a political union which the British people reject," said the deputy leader of the UK Independence Party (UKIP), Paul Nuttall, which outscored mainstream parties in Britain during the May election.
The results of the vote brought a clear message that Europeans were increasingly fed up with the EU, blaming the 28-nation bloc for painful austerity measures and a slow economy.
The weeks since have also seen a bitter dispute flare over the role of the European Union's parliament.
Britain and others publicly slammed moves by Schulz and other leading lawmakers to give parliament the lead in deciding who becomes the next president of the powerful European Commission.
In the end, parliament won the battle when EU leaders last week agreed to nominate Jean-Claude Juncker, the candidate for the conservative parties that emerged the victors on May 25th.
Juncker's nomination sparked a bruising campaign by Britain's Prime Minister David Cameron to block it on the grounds that the EU needs reform and not old faces.
Cameron sees in Juncker a dyed-in-the-wool European federalist who will not adopt reforms and whose pick by parliament sets a dangerous institutional precedent.
Previously, EU leaders chose the commission head among themselves.
Juncker has yet to win a majority vote in parliament on July 16, where he has the official backing of the centre-left and centrists in what is being compared to a German-style "grand coalition."
As a member of the second-placed Socialists, the 58-year-old Schulz won Tuesday's bid for parliament president thanks to support from the conservatives and centrists.
"This is a big group stitch-up," said UKIP leader Nigel Farage. "For them it's damn democracy, it's all about the carving up of power among the EU elite."
But Schulz did not get the full support of his allies, falling 70 short of a potential 479 votes.
Schulz, is best known beyond EU circles for facing down a Nazi jibe from Italy's then prime minister Silvio Berlusconi in a raucous European Parliament debate.
He entered parliament in 1994 and 10 years later emerged as leader of the centre-left socialists, the second largest grouping after the EPP.
In 2012, he became president – or speaker – of the house as a result of a right-left deal and he has built his political presence on the back of that high-profile post.