Kalvakuntla Chandrashekar Rao, who at one stage went on hunger strike as part of the push to create what is India's 29th state, was sworn in as chief minister during a morning ceremony in Hyderabad.
Residents broke into celebrations on the stroke of midnight, with a fireworks display lighting up the skies over the city.
India's new Prime Minister Narendra Modi was among the first to congratulate Rao, promising his "complete support to the people & Government of Telangana" in a message on Twitter.
"India gets a new state! We welcome Telangana as our 29th state. Telangana will add strength to our development journey in the coming years," Modi added.
"Telangana's birth comes after years of struggle and sacrifices by several people.
Would Nigerians celebrate a new state or a divided country?
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