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.
Daughter of divisive former prime minister Thaksin Shinawatra, Paetongtarn won by nearly two-thirds in a house vote on Friday, to become Thailand's second female prime minister and the third Shinawatra to take the office, following Thaksin and her aunt Yingluck Shinawatra.
The approval by King Maha Vajiralongkorn, a formality, was read out by House of Representatives Secretary Apat Sukhanand at a ceremony in Bangkok on Sunday.
Dressed in official uniform, Paetongtarn knelt in homage to a portrait of the king 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, who has never served in government, faces challenges on multiple fronts, with the economy floundering and the popularity of her Pheu Thai party dwindling, having yet to deliver on its flagship digital wallet cash handout program worth 500 billion baht ($A22 billion).
After accepting the royal endorsement, Paetongtarn hugged her father Thaksin and other family members.
The fall of her predecessor Srettha after less than a year in office is a reminder of the risk for Paetongtarn with Thailand trapped in a tumultuous cycle of coups and court rulings that have disbanded political parties and toppled multiple governments and prime ministers.
Also at stake is the legacy and political future of the billionaire Shinawatra family, whose once unstoppable populist juggernaut suffered its first election defeat in over two decades in 2023 and had to make a deal with its bitter enemies in the military to form a government.
The upheaval of recent days indicates a breakdown in a fragile truce struck between Thaksin and his rivals in the royalist establishment, which had enabled the tycoon's dramatic return from 15 years of self-exile in 2023 and ally Srettha to become premier the same day.
More than a week ago the court that dismissed Srettha over a cabinet appointment dissolved the anti-establishment Move Forward Party - the 2023 election winner - over a campaign to amend a royal insult law that the court said risked undermining the constitutional monarchy.
The hugely popular opposition, Pheu Thai's biggest challenger, has since regrouped under a new vehicle, the People's Party.
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