A former top diplomat, Zewde was appointed unanimously by Ethiopia's parliament.
In a unanimous vote on Thursday during the second Special Joint Session of Ethiopia's two houses of parliament - the House of Peoples' Representatives and the House of the Federation - lawmakers picked the career diplomat for the largely ceremonial role.
Prior to her appointment, Sahle-Work served as both the special representative of the United Nations' secretary-general and the head of the UN office to the African Union.
She will replace Mulatu Teshome who resigned in unclear circumstances and is expected to serve two six-year terms.
"Mulatu has shown us the way for change and hope, he has shown life continues before and after leaving power. I call on other to heed his example and be ready for change," Sahle-Work said in a speech in parliament on Thursday.
According to Ethiopian law, the prime minister occupies the highest seat of power, but the position of president carries important symbolic weight and social influence.
Sahle-Work will serve under Prime Minister Abiy Ahmed, who was elected in April and has unfurled a sweeping programme of reforms in the country.
In mid-October, Abiy appointed a 20-person cabinet in which half the posts were assigned to women.
They include Defence Minister Aisha Mohammed and Muferiat Kamil who leads the newly-created Ministry of Peace, responsible for police and domestic intelligence agencies.
"If the current change in Ethiopia is headed equally by both men and women, it can sustain its momentum and realise a prosperous Ethiopia free of religious, ethnic and gender discrimination," Sahle-Work said on Thursday.
A voice for women
During her diplomatic career, the 68-year-old was head of the UN office to Kenya and acted as Ethiopia's ambassador to several countries including France, Djibouti and Senegal.
Born in the Ethiopian capital, Addis Ababa, Sahle-Work studied in France and is fluent in English, French and Amharic - Ethiopia's main language.
In her first address to parliament, Sahle-Work stressed the importance of unity and promised to be a voice for women.
"Government and opposition parties have to understand we are living in a common house and focus on things that unite us, not what divides us, to create a country and generation that will make all of us proud," she said.
"The absence of peace victimises firstly women, so during my tenure I will emphasise women's roles in ensuring peace and the dividends of peace for women".
Sahle-Work's appointment makes her Africa's only serving female head of state.
SOURCE: News agencies - www.aljazeera.com