Describing the monumental change as a "new beginning", he vowed at a later ceremony at his vast Ankara presidential palace to be the president of all 81 million Turks.
Turkish President Recep Tayyip Erdogan takes oath of office at Grand National Assembly of Turkey in Ankara, yesterday. "We are leaving behind the system that has in the past cost our country a heavy price in political and economic chaos".
Deputy Chief of General Staff Gen. Ümit Dündar was named as the new Commander of Turkish Land Forces and Lt. Gen. Metin Gürak was appointed as the new Deputy Chief of General Staff by the new decree.
"We are embarking on this road by using this opportunity as best we can for a strong parliament, strong government and strong Turkey", he said.
Shortly before Erdogan took oath for a new term in office - which marks the start of a shift to an executive presidency - the government in its Official Gazette removed a clause that had stated the central bank governor was appointed by cabinet decision for five years, and could be re-appointed.
Prime Minister Binali Yildirim now goes down in history as the 27th and final holder of the post in Turkey.
The lira TRYTOM=D3, which has lost almost a fifth of its value against the dollar this year, dropped almost 3 percent to 4.74 to the USA currency after the cabinet announcement.
He says the changes, the biggest overhaul of governance since the modern Turkish republic was founded from the ruins of the Ottoman Empire nearly a century ago, are needed to drive economic growth and guarantee security.
At the center of the quarrel is the president's demand for a greater say over monetary policy and his insistence - against economic orthodoxy - that interest rates need to be lowered to tamp down inflation that's more than triple the government's 5 percent target. "In other words, Turkey will be an institutionalized autocracy", former EU Ambassador to Turkey Marc Pierini said.
Those attending the ceremony at the presidential palace on Monday evening will include Russian Prime Minister Dmitry Medvedev, in a new sign of the warm ties between Ankara and Moscow.
No major Western leader featured on a list of 50 presidents, prime ministers and other high-ranking guests.
In the aftermath of the coup, Turkey, a member of the North Atlantic Treaty Organisation military alliance and still nominally a candidate to join the European Union, has detained some 160,000 people, jailed journalists and shut down dozens of media outlets.
After winning 52.9 percent of the vote in Turkey's presidential election two weeks ago, Erdogan was granted the ability to call additional elections, appoint judges without parliamentary approval, dissolve Parliament, and issue decrees that had previously been reserved for states of emergency.
Investors are also keen for details on Erdogan's new economic team, which is expected to be announced later on Monday.
Turkey also faces a widening current account deficit making it reliant on weak foreign investment to plug the gap.
The lira, which is down just under 20 percent so far this year, had gained earlier in the day.
Scrapping the term would remove a shield that helps ensure the bank's independence from politicians, former central banker Ugur Gurses said. An adviser to Erdogan later said that the governor's term would remain at five years.