The silver-haired Diaz-Canel -- a top Communist Party figure who has served as first vice president since 2013 -- assumed power from Raul Castro, who himself took over from his elder brother Fidel, father of the 1959 revolution.
In his first speech as president, Diaz-Canel vowed to keep the country on the path of that "revolution," but also on the road to economic reform, a process begun by Castro which saw him opening the door to small private entrepreneurs.
"The mandate given by the people to this legislature is to continue the Cuban revolution at this crucial historic moment, which will be marked by what we must do to implement the economic model" put in place by Raul Castro, he said.
"I am here to work, not to make promises," said Diaz-Canel, who turns 58 on Friday.
But he will remain under the watchful eye of Castro, who confirmed that he will continue to serve as the head of Cuba's all-powerful Communist Party until its next congress in 2021.
Diaz-Canel said in his own speech that Castro "will still preside over decisions of major importance for the present and future of the nation."
As the historic handover played out live on state TV, Cubans across the island were glued to their screens, watching at home or at work as the former engineer took his seat at the table, becoming the island's first president born after the revolution.
Diaz-Canel was voted in by the National Assembly on Wednesday, and the result was formalized on Thursday.
His appointment has many in the country of more than 11 million people -- where the average monthly salary is $30 -- hoping he will push through reforms that will improve their daily lives.
"The power is passing to a much younger person, with new ideas, new perspectives, so we hope that the reforms will move much faster," said Yani Pulido, a 27-year-old waitress working in a bar in Old Havana.
But the United States, with whom Raul Castro launched a rapprochement and renewed diplomatic ties in 2015, was less welcoming.
"We are disappointed that the Cuban government opted to silence independent voices and maintain its repressive monopoly on power, rather than allow its people a meaningful choice through free, fair and competitive elections," State Department spokeswoman Heather Nauert said.
"Cuba's new president should take concrete steps to improve the lives of the Cuban people, to respect human rights and to cease repression and allow greater political and economic freedoms."
- Applause, and Fidel's empty seat -
The National Assembly erupted into applause as the result was read out, with delegates smiling and shaking hands warmly with Castro and Diaz-Canel.
As he walked to the front of the chamber, Diaz-Canel high-fived the front row of delegates and embraced Castro as he took the stage.
Then the 86-year-old raised his successor's left arm in the air in victory, prompting another wave of applause from the delegates -- some of whom were in civilian attire, while others wore military fatigues.
It was a historic, though understated, handover.
As Castro got up from the seat he has occupied for the past 12 years, it was immediately taken by Diaz-Canel, a man nearly 30 years his junior who has spent years climbing the party ranks.
Next to him was the empty seat once occupied by Fidel, who died in 2016.
Between them, the Castro brothers made Cuba a key player in the Cold War and helped keep communism afloat despite the collapse of the Soviet Union.
Raul has been in power since 2006, when he took over after illness sidelined Fidel.
Thursday's handover took place on the anniversary of the 1961 Bay of Pigs invasion, when Fidel's forces defeated 1,400 US-backed rebels seeking to overthrow him.
- Man of the system -
Although he has advocated fewer restrictions on the press and a greater openness to the internet, he also has a ruthless streak, with harsh words for Cuba's dissidents and the United States.
His new right-hand man, his First Vice President, will be 72-year-old Salvador Valdes Mesa, a former union leader.
Diaz-Canel inherits a youthful population hungry for change, but analysts believe he will favor continuity over change in the early days -- and could hit some stumbling blocks.
"He comes from the system, but it is the rigidity of the system which is the biggest obstacle to pushing forward with the necessary political and economic changes," said Michael Shifter, head of Washington-based think tank Inter-American Dialogue.
"It will be a test of his political ability," he added. "And he could encounter resistance."
- Countries: Cuba