Arnold Schwarzenegger (search) was sworn in Monday as California's 38th governor, humbly promising to serve Californians and to give back to the state that gave him so much.

"I am humbled, I am moved and I am honored beyond words to be your governor," the Austrian-born Schwarzenegger said in his speech after taking the oath. "I have taken the oath to serve you … I will not forget my oath and I will not forget you."

The actor-turned-politician came to the United States 35 years ago at the age of 21 knowing no English and with hardly a penny to his name. He made his way to fame by first becoming a champion bodybuilder, then actor and businessman.

He now is the head of the nation's most populous state and the world's sixth-largest economy.

"I have an immigrant's optimism," he said. The system does work and I believe that with all my heart."

About 7,500 guests received tickets to attend the hour-long ceremony on the steps of the state Capitol. California Supreme Court Justice Ronald George administered the oath of office while first lady Maria Shriver (search) held the 192-year-old family Bible.

An entourage of Hollywood stars like Rob Lowe, Rob Reiner, Danny DeVito and Jamie Lee Curtis headed north to watch one of their own be sworn in. Singer and actress Vanessa Williams (search) sang the national anthem.

Also attending were Schwarzenegger's newly nominated education secretary, former Los Angeles Mayor Richard Riordan; former U.S. Secretary of State George Shultz; outgoing Gov. Gray Davis; former Gov. Pete Wilson and Kennedy clanswoman, Eunice Shriver, Schwarzenegger's mother-in-law and sister of the late President John F. Kennedy.

Four of the five living former governors of California — Democrats Davis and Jerry Brown and Republicans Pete Wilson and George Deukmejian — were also present. Only Republican Ronald Reagan, who is suffering from Alzheimer's disease, was not.

"Today is a new day in California," Schwarzenegger said in his speech. "It is no secret that I am a newcomer to politics. I realize I was elected on faith and hope and I feel a great responsibility not to let the people down."

The first thing Schwarzenegger did after the ceremony was to sign Executive Order No. 1, a move repealing the state's 300 percent increase in the car tax. Now the state must find an additional $4.2 billion to make up for the lost revenue.

Schwarzenegger said he would summon the Legislature into special session to address the budget and further reform the workers' compensation system. He has also promised a balanced budget that does not include any new taxes or significant cuts in education and local governments. The session could begin as early as Tuesday.

He promised to spend the next three years rebuilding the state's economy, protecting the needs of children and the elderly and breaking the hold of special interests.

"I enter this office beholden to no one except you, my fellow citizens," Schwarzenegger promised. "I pledge my governorship to your interests, not to special interests.

"I want the people to know that my administration is not about politics, it is about saving California."

California's credit rating is the lowest among all 50 states. State finances are in disarray, with spending and tax revenues seriously out of balance.

California's challenges "may look insurmountable," Schwarzenegger said. "But I learned something from all those years of training and competing. ... What I learned is that we are always stronger than we know. California is like that, too."

Again promising to put the state's finances in order, he added, "I will not rest until California is a competitive, job-creating machine."

Just before the ceremony began, Schwarzenegger walked down the Capitol building's hallway with Shriver, a Kennedy clan member, and their four children, daughters Katherine and Christina and sons Patrick and Christopher.

Afterward, Schwarzenegger was expected to attend three luncheons — for federal and state officials, for friends and family and a third hosted by the state Chamber of Commerce.

Not as Showy as Hollywood

The celebrity-packed but dressed-down celebration was void of black-tie galas that have greeted previous governors.

Aides say the actor wanted to avoid a Hollywood-style celebration, since the state is facing considerable fiscal problems and a bitterness that lingers from the first successful recall election in the state.

But pomp and circumstance were not altogether absent. About 740 journalists from around the world, including Japan, Australia, France, Germany, the United Kingdom and Schwarzenegger's native Austria, sought press credentials — about the same number that would request passes to a presidential inauguration.

"Sacramento has never seen anything like this before — it is astonishing," said Sherry Bebitch Jeffe, a political scientist at the University of Southern California. "There has never been this kind of intense media attention on the governor at any time in the state."

About 500 California Highway Patrol officers were assigned to the event, said CHP Commissioner D.O. "Spike" Helmick. Nestled on top of nearby buildings, in trees, on motorcycles and on horseback, officers were tightly watching the capital and its new charismatic leader.

"We don't want anything to happen to spoil the fun," Helmick said.

Action-Packed Agenda

Based on Schwarzenegger's blow-'em-up movie image, some say it's not hard to imagine "The Terminator" star roaring one of his Hummers up the steps of the state Capitol clad in Armani with an expensive cigar clenched between his teeth.

But others suggest that Schwarzenegger shouldn't rely on his Hollywood career for guidance on how to do his job.

"I think his background doesn't really prepare him well for dealing with the budget crisis, which is maybe $10 billion or more," said David Corn, editor of the Nation. "If he's done a $10 billion budget movie in six weeks, then maybe he'd be prepared for what's about to hit him."

The governor-elect is bound by the state constitution to offer a budget by Jan. 1.

Schwarzenegger has already appointed aides to top positions, including Cabinet seats for health and human services, food and agriculture, correctional agencies and others. All require state Senate confirmation.

Fox News' Sharon Kehnemui and The Associated Press contributed to this report.