Assembly Speaker Kavinder Gupta gave the oath of office to Mehbooba Mufti, who was on June 25 declared elected from Anantnag in south Kashmir.
She defeated her nearest rival, Hilal Ahmad Shah of Congress, by over 12,000 votes.
The by-election was necessitated by the death of her father and then Chief Minister Mufti Mohammad Sayeed.
Mehbooba Mufti, who became Chief Minister on April 4, was until Thursday a Lok Sabha member from Anantnag. She will resign her seat, leading to fresh elections in the Lok Sabha constituency.