Philippe, 53, was sworn in at just after noon (10:15 GMT) before parliament, pledging to serve and protect the country to the best of his ability.
Belgium's King Albert abdicates in favour of his son Philippe, saying his country should remain an "inspiration" to Europe
Concerned about his advanced age and health, King Albert II of Belgium is giving up his throne Sunday.
His son Crown Prince Philippe will succeed him, the king said in a nationally televised address.
"I have noticed how my age and my health have not permitted me to exercise my duties the way I would like to," the 79-year-old king said.
In a solemn ceremony at the royal palace, Albert signed the act of abdication in front of an audience of some 250 local dignitaries and political leaders, thanking them "for all that you have achieved during my reign".
Belgium's King Albert II is about to formally abdicate in favour of his son Crown Prince Philippe. In his final address as king on Saturday, the 79-year-old monarch urged Belgians to give his 53-year-old son "your support".
He also stressed that his wish was that Belgium - split between the Flemish-speaking north and the French south - remained united.
Earlier this month, Albert said he was no longer well enough to carry on.
Philippe, the Oxford- and Stanford-educated prince, will then become the country's seventh king.
He has also trained as an air force pilot.
Belgium has a constitutional monarchy in which the king plays a largely ceremonial role.
Albert II, king of a sharply divided Belgium, called on its people Saturday to stick together as he bade them a formal farewell ahead of his abdication.
The king said that as he prepared to step down Sunday, his first wish was that Belgium, split between a Flemish-speaking north and a French south, "retains its cohesion" and builds on the gains made over the past 40 years of change.
"The country has been transformed ... in a peaceful and democratic way ... into a Federal state whose parts enjoy a large degree of autonomy," Albert said in a television broadcast on the eve of Belgium's national day.
The latest reforms will only increase this autonomy, he said.
With a difficult history and an independent state only since 1830, Belgium has struggled to accommodate the often competing demands of its main Flemish and French communities.
The drive towards autonomy has eased some of the tensions but there remain very strong separatist elements, especially in the Flemish north, which want even greater freedom to the point where some fear for the future of a single Belgium which faces elections next year.
The king said that at a time of rapid change, it was important that power be exercised at the most appropriate and most effective level.
"I am convinced that maintaining the cohesion of our Federal state is vital, not only for our quality of life together, which requires dialogue, but also so as to preserve the well-being of all," he said.
King Albert is leaving - the news rocked Belgium Wednesday after King Albert II, 79, had announced that he would abdicate in favor of his son, Crown Prince Philippe. This is due to happen on July 21, when the country will be up for Independence Day festivities. Thus, Albert II became the first Belgian king to voluntarily step down.
Albert explained the move with his age and frail health that no longer allow him to carry out his functions, as he would want to.
“After a reign of 20 years I believe the moment is here to hand over the torch to the next generation; Prince Philippe is well prepared to succeed me,” Albert said in a nation-wide televised address.
Prince Philippe will get the throne right on the brink of nationwide and regional elections that are due next spring and will also have to deal with the far-right Flemish Interest party rising its head.
Albert’s 1993 reign started with a major scandal when he had to acknowledge the existence of an out-of-wedlock daughter. Later, the King had to combat financial troubles and a constitutional crisis triggered by a long-term political struggle between northern Dutch-speaking Flanders and French-speaking southern Wallonia.
VoR’s Brendan Cole spoke to the Belgian journalist Katherine Mamartsto find out how Albert II tackled these troubles and what Belgians think of the quitting King.
Ms. Mamarts confirmed that the leave was not a surprise as there were earlier signs of a potential abdication as well as rumor that the King was old and not in that good shape to steer the country. At the same time, Crown Prince Philippe has been spotted preparing for taking the helm. Recently he returned from a trip to the US where he went as part of the Belgian business delegation and people noticed great changes in him – the Prince seemed to more cool and opened to public, the journalist said.
Though Belgium’s neighbor, the Netherlands, saw an abdication earlier this year when Queen Beatrix stepped down after a 33-year reign in favor of her eldest son, Belgians don’t link the two events and don’t think that King Albert simply followed the Dutch scenario.
Despite a rather ceremonial role played the King in Belgium, Albert II was more than a decorative figure. He had a big say in the Constitutional Crisis of 2011 and managed to pull the country together, after it has been without a proper government for 459 days.
Then Flanders, the Dutch-speaking half of the country rose and claimed to be tired of funding the economically weaker region of Wallonia.
Belgium is officially bilingual and decentralized with separate education, media and political parties for both the Flemish and the French parts.
Back in 2011, Albert II managed to combat the crisis and people really appreciated this and supported him, though the Flemish part is not that happy with the monarchy as an institution.
Crown Prince Philippe was actually the one who was supposed to become King after the death of Albert’s brother Baudouin, but then people decided he was not ready for the throne. Now, even though Prince Philippe seems more mature, Belgians still question what kind of king he will be.
Belgian King Albert II has announced that he will relinquish the throne on July 21, allowing his eldest son Prince Philippe to take over.
"I intend to abdicate on July 21," the sovereign said in a speech broadcast to the nation from the royal palace.
"Prince Philippe is well prepared. He and Princess Mathilde have my entire confidence."
"So it is with serenity and confidence that I announce I intend to abdicate on July 21," he added.
In his short speech to the nation, read first in French then in Flemish, Belgium's two main languages, the 79-year-old monarch said he was too tired and too frail to continue to reign.
"I am at an age never attained by predecessors," he said. "My age and my health do not allow me to exercise my duties as I would like."
As the second son of King Leopold III (1901-1983) and Astrid of Sweden (1905-1935), Albert was not destined to reign but was forced to ascend to the throne in 1993 on the death of his older brother King Baudouin, who passed away without an heir.
His decision to step down is the first abdication in the history of Belgium.
Some had hoped that Albert would remain until Belgium holds federal elections next year. The royal family is seen as one of the few forces uniting the country's fractious Dutch-speaking Flemish and French-speaking Walloon communities.
Speculation has nevertheless been rife that the king would soon abdicate, given his advanced age and concerns about his health.
Albert has also recently been embroiled in a court case involving a woman who claims to be his illegitimate daughter. Delphine Boel has summoned the ruler and two of his children into court, demanding DNA evidence to establish her royal lineage.
Albert was set to address the nation at 6 pm local time (1600 GMT), in a speech that was to be transmitted by the country's largest television and radio stations, the royal palace said.
Belgian Prime Minister Elio Di Rupo was to make a statement shortly after. The king met with leading government ministers ahead of his planned speech.
If confirmed, it would be the first time that a Belgian king abdicates, and would follow the abdication in April of the Dutch Queen Beatrix, who after 33 years on the throne said it was time "to place the responsibility of the country in the hands of a new generation."
Albert's successor would be his eldest son, Prince Philippe. The 53-year-old is married to Princess Mathilde, who is of Belgian and Polish noble lineage. They have four children.
Philippe is a qualified fighter pilot, and is ranked Lieutenant General and Vice Admiral in the armed forces. He graduated from Stanford University with a Masters in political science.
Voice of Russia, BBC, dpa, AFP, CNN