Around 2,000 guests attended the Kremlin ceremony, including regional governors, lawmakers, and foreign ambassadors.
At exactly noon, a somber-looking Putin addressed a packed hall of gathered dignitaries. Barely glancing down to look at his notes, he praised the country's progress in the eight years since he took office and entreated Russians to support his successor.
"Eight years ago, when I took the oath of office as Russian president for the first time, I vowed to work openly and honestly, to serve the people and the state faithfully," Putin said. "And I have not broken my promise.... Now, as I hand over the powers of the head of state, I would also like to say that the responsibility of protecting Russia was and remains the highest civic duty for me. I have kept to it all these years and will continue to do so my whole life."
Minutes earlier, Medvedev, wearing a black suit and looking apprehensive, had walked the considerable length of red carpet to the podium, where he took his place beside Putin. Then, placing his hand on a gilded copy of the Russian Constitution, he swore his oath to the country.
"I swear that in exercising the powers of the president of the Russian Federation I shall respect and protect human and civil rights and freedoms, observe and protect the constitution of the Russian Federation, protect the sovereignty and independence, security, and integrity of the state, and faithfully serve the people," he said.
Looking relieved after the official part of the ceremony came to a close, Medvedev walked back up the carpet, nodding and smiling to guests as they applauded Russia's new president.
Aleksei Mukhin, the director of the independent Center for Political Information in Moscow, was one of millions of viewers who tuned in to watch the ceremony on state television. The full inauguration, which lasted an hour, was carried live on two national television channels. Mukhin's impression was that Putin had found it difficult to give up the presidency.
"Vladimir Putin looked rather sad, which was very strange," Mukhin said. At the recent NATO summit in Bucharest, Putin "told everyone he was looking forward to his forthcoming 'demobilization' and said on a number of occasions that he was happy to be stepping out of the president's shoes."
But while Putin has been replaced by his close friend and ally, he has no intention of leaving politics. On May 8, Putin is expected to be voted in as prime minister, a position whose strength he has bolstered in recent months.
Even the process of making him prime minister appears to have been speeded up, says Mukhin.
"The next step is that Putin will become head of the Unified Russia party, the party of power," Mukhin said. "Then, thanks to the powers of Boris Gryzlov, the speaker of parliament, the process of making Putin prime minister will be accelerated. [Gryzlov] will force members of parliament to approve his candidacy. This isn't exactly the way things should work in the lower house of parliament. In actual fact, it's rather a lengthy process which should take about three weeks. But the leaders of the house intend to resolve the situation by [May 8]."
Still described as Russia's national leader, Putin is expected to continue to wield enormous power as prime minister. And Kremlin-watchers say Medvedev, who has spent most of his career working for Putin, is unlikely to veer from the course set by his predecessor. Observers widely believe that when Medvedev's new administration takes shape, it will include many of the names found in Putin's government.
Following the inauguration, Medvedev and Putin descended the Kremlin steps into the courtyard below where, beneath gray skies, the presidential guard had gathered to salute their new leader.
Cannons fired overhead and an orchestra struck up as the two men chatted and watched the procession together, a fitting image foreshadowing their joint future in running the country.