Vice President Joe Biden administered the oath of office in a chamber peopled by a dozen Democratic senators and a handful of Republicans.
As he walked up the center aisle to meet Biden, Schatz, 40, took Akaka's hand and helped the frail Democratic senator, who is retiring, stay at his side.
Schatz had flown to Washington hours earlier on Air Force One with President Barack Obama. Democratic Gov. Neil Abercrombie named Schatz, who had been lieutenant governor, to succeed Inouye, who died last week of respiratory complications at the age of 88.
The selection went against the dying wishes of Inouye, who is revered in Hawaii politics. Inouye wanted U.S. Rep. Colleen Hanabusa to succeed him.
Schatz is a former state representative and onetime chairman of the state Democratic Party who ran Obama's 2008 campaign in Hawaii.
He said Wednesday that his top priorities would be addressing global climate change, preserving federal funds used in Hawaii for things like defense spending and transportation, and getting federal recognition for Native Hawaiians for forming their own government, similar to many Indian tribes.
Schatz beat out Hanabusa and Esther Kiaaina, a deputy director in the state Department of Land and Natural Resources. The three candidates were selected by state Democrats Wednesday morning from a field of 14. The candidates briefly made their cases before the state party's central committee.
Obama returned home early from his Hawaii Christmas vacation as Congress considered what to do about the so-called fiscal cliff.
Schatz will become Hawaii's senior senator. Akaka is retiring after 22 years, and Democratic Rep. Mazie Hirono was elected in November to succeed him.
Inouye was by far Hawaii's most influential politician and one of the most respected lawmakers in Washington after serving five decades in the Senate. He sent Abercrombie a hand-signed letter dated the day he died, saying he would like Hanabusa to succeed him, calling it his "last wish."
Four days after eulogizing Inouye in the courtyard of the Hawaii Capitol, Abercrombie said he had to consider more than just Inouye's wishes in filling his seat.
"Of course Sen. Inouye's views and his wishes were taken into account fully, but the charge of the central committee, and by extension then myself as governor, was to act in the best interests of the party ... the state and the nation," Abercrombie said.
Under state law, the successor had to come from the same party as the prior incumbent. An Abercrombie spokeswoman said the governor did not feel any political pressure from within his party to make the choice he made.