In an historic shift from the dominance of Tibetan politics by religious figures, the new prime minister, who has never set foot in Tibet, will assume the duties relinquished by the Dalai Lama in May.
Although the 76-year-old monk will retain the more significant role of spiritual leader, as well as his hold on major policy-making decisions, the transition makes Sangay a far more prominent figure than his predecessor.
The challenge he faces is daunting.
The Dalai Lama casts a long and iconic shadow and Sangay is little known outside the narrow confines of the exiled community.
He has publicly backed the Dalai Lama's policy of seeking "meaningful autonomy" for Tibet under Chinese rule, but his age and former membership of the pro-independence Tibetan Youth Congress has fuelled speculation that he may harbour a more radical agenda.
Monday's ceremony, presided over by the Dalai Lama, was held in the Tsuglagkhang Temple, the spiritual centre of the Indian hill town of Dharamshala where the government in exile is based.
After traditional offerings of tea and sweetened rice, Sangay took the oath of office at exactly nine seconds after 9:09am (0339 GMT) -- the number nine being associated with longevity.
Born and raised in the northeast Indian tea-growing region around Darjeeling, Sangay went on to study at Delhi University before completing a
master's degree at Harvard Law School.
He took up residency in United States and became a senior fellow at the school.
His profile is not unusual among the new generation of exiled Tibetan activists who, while observant Buddhists, see their professional qualifications as a crucial asset for leadership.
In an interview with AFP in Dharamshala earlier this year, Sangay acknowledged that the Dalai Lama was irreplaceable but added that there was a hunger in the Tibetan community to "see the younger generation taking over the leadership".
Sangay was elected prime minister in April, easily beating the two other candidates with 55 percent of the vote among the 49,000 exiled Tibetans in India and overseas who cast their ballots.
The Dalai Lama's initiative to devolve power reflected concerns about how to sustain a struggle for Tibetan rights that he has single-handedly represented since fleeing his homeland to India in 1959.
An elected figure is seen as a solution, but one that is fraught with difficulties.
The government-in-exile is not recognised by any foreign states, China refuses to acknowledge it, and its legitimacy in the eyes of Tibetans in Tibet might be questioned without the Dalai Lama's patronage.
Copyright AFP (Agence France-Presse), 2011