But the celebrations followed a turbulent inauguration.
Proceedings were delayed for hours amid a last-ditch attempt made by his opponents in Congress to weaken his authority.
After his swearing in, Arevalo hailed the strength of Guatemala's democracy.
"What might appear to be simply the outcome of a political process and formal changes in institutions is in reality the starting point for a transformation that has begun in each and every one of us."
Arevalo's unexpected election victory was seen as a watershed moment for Central America's most populous nation.
The career diplomat, sociologist and son of a former president, won August elections by a landslide.
But he has faced a series of legislative setbacks and efforts to undermine his victory triggered by his opposers.
Arevalo replaces one of his greatest political adversaries, conservative politician Alejandro Giammattei, whose government was engulfed in corruption scandals.
Guatemala's attorney general, a Giammattei ally, has made several attempts to hinder Arevalo's transition to the presidency.
They include efforts to strip Arevalo and his deputy of legal immunity, trying to suspend his Semilla party and annul the election.
The attorney general's office defends its actions as within the framework of Guatemala's laws.
65-year-old Arevalo has long cast himself as an advocate for democracy - a leader of a progressive movement set on reshaping a political landscape long dominated by right-wing parties.
But the infighting has highlighted to many Guatemalans the limitations Arevalo's administration faces.
Arevalo hopes to bring sweeping reforms and tackle the key drivers of migration to the United States - the rising cost of living and violence.
But his government will also have to balance U.S. demands to stem migration, amid record-high remittances that keep the local economy afloat.
