Mr Morales unveiled his "cabinet of change" at Quemado Palace one day after his triumphant inauguration during which he vowed to end centuries of injustice that he said have been inflicted on the Bolivian Indian community.
"Politics is the science of serving the people, not living off the people," Mr Morales said in the cabinet unveiling ceremony, in which he wore his trademark red sweater with white and blue stripes, continuing his refusal to wear suits.
He told his new ministers: "I ask you personally, in the name of the people: zero corruption, zero bureaucracy. We have the task of dignifying politics."
Mr Morales said his government's job was to fulfill "the people's mandate to change the neo-liberal model and democratically fix the structural and social problems."
Indigenous ministers
His 16-minister cabinet has a large number of indigenous ministers as well as more women in influential positions.
David Choquehuanca, an Aymara Indian, like Mr Morales, who has worked with international agencies, was named foreign minister.
During the ceremony, Mr Choquehuanca spoke in a native Andean language to proclaim that a great new day had arrived for Bolivia's Indians, who make up more than 60 percent of the population.
Mr Morales also broke the mold by picking the head of the domestic workers' union, Casimira Rodriguez, a Quechua Indian, as justice minister.
Alicia Munoz, an anthropologist and former senator, became the first woman interior minister.
Andres Soliz Rada, a leftist attorney and journalist, was put in charge of the sensitive energy ministry and will have the delicate task of dealing with foreign oil companies.
Two presidents resigned in the last two years amid protests against their policies for the country's natural gas wealth.
A radical union leader Abel Mamani, another Aymara, was put in charge of the water ministry of this landlocked country, the poorest of South America.
The water industry was privatised in 1997 and Mr Mamani will be in charge of efforts to re-nationalise it.
Greater state control of the natural gas wealth and other resources was a cornerstone of Mr Morales' election campaign.
Humiliation to end
At his inauguration on Sunday, Mr Morales vowed to end what he called the humiliation of the majority Bolivian Indian community.
"We have been condemned, humiliated ... and never recognised as human beings," he said.
"500 years of campaigning and popular resistance by indigenous people have not been in vain. We are here and we say that we have achieved power to end the injustice, the inequality and oppression that we have lived under."
Mr Morales joins a growing list of left-wing leaders in South America who form a growing obstacle to US influence in the region. Bolivia's new president vowed during his campaign to be the "worst nightmare" of the United States.
One of his first acts Monday was to sign a cooperation accord with
Venezuela's socialist President Hugo Chavez, another virulent critic of the United States.
Mr Chavez, who was at the inauguration on Sunday with a host of other South American leaders, praised his left-wing ally predicting that Mr Morales would "be successful in reforming Bolivia in a way that no one else has."
Mr Morales will be Bolivia's fifth president since 2002 and took part in protests that led to the downfall of two. But he has been given a largely positive welcome from leaders and media across South America.
Most comment highlighted his more moderate stance toward the United States and to unify Bolivia at his inauguration and in more recent speeches.
Even in the United States, The Washington Post headline on its front page inauguration story said: "For Bolivian majority, a new promise."