The king's approval, a formality, was read out by House of Representatives Secretary Apat Sukhanand at a ceremony in Bangkok on Sunday.
Dressed in official uniform, Paetongtarn got down on her knees and paid homage to a portrait of King Vajiralongkorn before giving a short speech thanking the king and the people's representatives for endorsing her as prime minister.
"As head of the executive branch, I will do my duty together with the legislators with an open heart," she said.
"I will listen to all opinions so together we can take the country forward with stability."
Paetongtarn, 37, becomes Thailand's youngest prime minister just days after ally Srettha Thavisin was dismissed as premier by the Constitutional Court, a judiciary central to Thailand's two decades of intermittent political turmoil.
Paetongtarn Shinawatra with her father Thaksin Shinawatra after the ceremony in Bangkok. (EPA PHOTO)
Daughter of divisive political heavyweight Thaksin Shinawatra, Paetongtarn sailed through a house vote on Friday, winning 319 votes, or nearly two-thirds of the house to become Thailand's second female prime minister and the third Shinawatra to take the premiership after her aunt Yingluck Shinawatra and father Thaksin.
Paetongtarn, who has never served in government previously, will face challenges on multiple fronts:Thailand's economy is floundering and the popularity of her Pheu Thai party is dwindling, having yet to deliver on its flagship digital wallet cash handout program worth 500 billion baht ($A21.68 billion).
