JOIN USEmanuel took the oath of office during an inauguration ceremony at the downtown Millennium Park. He replaces Mayor Richard M Daley, who retired after 22 years in office after declining to seek a seventh term.
Emanuel, 51, quit working for President Barack Obama in October to run for mayor.
Vice President Joe Biden was the chief guest and Mayor Richard Daley and his wife Maggie were also present.
"Today, more than any other time in our history, more than any other place in our country, the city of Chicago is ready for change," Emanuel told thousands of people gathered for the occasion.
"For all the parents who deserve a school system that expects every student to earn a diploma; for all the neighbors who deserve to walk home on safer streets; for all the taxpayers who deserve a city government that is more effective and costs less; and for all the people in the hardest-working city in America who deserve a strong economy so they can find jobs or create jobs -- this is your day," he added.
"As your new mayor, it is an honour to fight for the change we need and a privilege to lead the city we love. We have much to do, but we should first acknowledge how far we have come," Emanuel said.
Emanuel also paid tribute to outgoing six-term Mayor Daley.
Emanuel said that when Daley took office as mayor 22 years ago, he challenged all of us to lower our voices and raise our sights.
"Chicago is a different city today than the one Mayor Daley inherited, thanks to all he did."
"Back then, this was an abandoned rail yard. A generation later, what was once a nagging urban eyesore is now a world-class urban park. Through Mayor Daley's vision, determination and leadership, this place, like our city, was reborn," Emanuel added.
"Our city's financial situation is difficult and profound. We cannot ignore these problems one day longer," Emanuel said referring to the half a billion dollar budget deficit Chicago faces.
"We are moving forward the only way we truly can: together as one city, with one future forward the only way we truly can: together as one city, with one future," Emanuel said.
In his speech Emanuel thanked Obama for allowing him to come back and run for mayor. He later met citizens at an Open House at the City Hall.
Emanuel inherits a USD 700 million budget shortfall next year. And because of some controversial decisions by Daley, he has limited ways to pay for school improvements or repair the city's aging infrastructure.