Brigi Rafini, a Tuareg from Agadez in the north of the country, will lead the government, state radio announced.
News of his appointment came just hours after Issoufou took his oath of office on the Koran, thus, ending the military transition that began in February 2010 after the overthrow of Mamadou Tandja.
"I will be the president of all the Nigeriens," said Issoufou during the ceremony at a stadium in the capital Niamey.
His prime minister Rafini is a former deputy for the region with the Rally for Democracy and Progree party (RDP) of former president Ibrahim Bare Mainassara, assasssinated in 1999 by members of his own bodyguard.
From a civil service background, he served as a minister under Mainassara and served several terms as mayor of the Iferouane district, where there was fierce fighting between Tuareg rebels and the army between 2007 and 2009.
The RDP backed Issoufou in the March 12 run-off of the presidential race, where he beat former prime minister Seini Oumarou.
Several African heads of states were among the three thousand people who attended the president's investiture.
They included President Abdoulaye Wade of Senegal, Mali's Amadou Toumani Toure, Congo-Brazzaville's Denis Sassou N'Guesso, Ali Bongo of Gabon, Benin's Yayi Boni, and Liberia's Helen Johnson Sirleaf.
France, the former colonial power, was represented by co-operation minister Henri de Raincourt.
Anne Lauvergeon, chief executive of Areva, the French nuclear group, which runs uranium mines in the north of the country, also attended.
Issoufou paid tribute to General Salou Djibo, the officer who had headed up the transitional military administration, praising him for having honoured his promise to hand over to a civilian administration.
He promised to eradicate hunger and to fight corruption and insecurity in the country, which is battling the threat of al-Qaeda cells which have kidnapped several Westerners in recent years.
He has argued for closer co-operation with his neighbours in the Sahel region to fight the threat and has promised the army more men, better trained and better equipped.
Issoufou, 59, won the run-off with 58% of votes to 42 percent for Oumarou, the election commission said.
The February 18 2010, coup unseated Mamadou Tandja after 10 years in power.