Zimbabwe's state election panel said Mugabe won a landslide victory in the July 31 elections with 61 percent of the presidential vote.
At the inauguration, elder African statesman Kenneth Kaunda of Zambia sat with other ex-presidents as well as the current leaders of Equatorial Guinea, Tanzania, Mozambique, Namibia and Congo. South Africa's President Jacob Zuma, the chief regional mediator on ZImbabwe's crisis, was on an official trip to Angola and sent his vice president instead. Also attending was former South African President Thabo Mbeki, the previous mediator for the Southern African Development Community, a 15-nation political and economic bloc that has supported Mugabe.
Mugabe said Africa and many nations around the world "hailed our elections as free and fair and credible" with the exception of "a few dishonest Western countries" that condemned the way the vote was conducted.
"These Western countries hold a different negative view of the electoral process. Well, there's nothing we can do about their moral turpitude," Mugabe said.
"We are not curtsying or bowing to any foreign government, however powerful it is or whatever filthy lucre it flaunts. We abide by the judgment of Africa. America dares raise a censorious voice to contradict Africa's verdict. Who gave them the gift of seeing better than all of us?" Mugabe said.
Britain, the former colonial power, the European Union and the United States will likely maintain economic restrictions on Mugabe and leaders of his ruling party. The West has pushed for democratic reform in Zimbabwe.
Mugabe had declared the day a public holiday, businesses were closed and downtown Harare was virtually deserted, similar to a Sunday.
A handful of Western diplomats were placed in a distant, upper tier of the stadium's stands on Thursday.
Soldiers fired a 21-gun artillery salute as military jets flew overhead. Musicians played for the crowds, many wearing the regalia of Mugabe's party, flags and cotton cloth emblazoned with his portrait, some of it given out at the entrance gates. Hundreds of helium balloons in the colors of the national flag were released at the Chinese-built National Sports Stadium.