Erdogan will face immediate and major challenges in his second term, posed by an imbalanced fast-growing economy and foreign policy tensions between the West and Turkey, a North Atlantic Treaty Organisation member.
He will take the oath of office in parliament at 4 pm (1300 GMT), before attending a ceremony two hours later at the huge presidential palace he has constructed in the capital.
Erdogan, who has dominated Turkish politics for 15 years, says the powerful new executive presidency is vital to drive economic growth, ensure security after a failed 2016 military coup and safeguard the country from conflict in Syria and Iraq. The role of prime minister has also been eliminated, and the president will now be able to pick his own Cabinet.
Under the new system, 64-year-old Erdogan will lead the state's executive branch and have the right to appoint and remove vice-presidents, a newly introduced position, as well as ministers, high-level officials and senior judges - without parliamentary approval. The coup was followed by a crackdown on members of the bureaucracy, judiciary, armed forces, police, media and academia, with more than 130,000 people dismissed from their jobs or arrested.
The new system, which dispenses with the office of prime minister, was agreed in a bitterly-fought 2017 referendum narrowly won by the "Yes" camp.
He says the changes, the biggest overhaul of governance since the modern Turkish republic was founded from the ruins of the Ottoman Empire nearly a century ago, are needed to drive Turkey's economic growth and guarantee its security.
The new government faces immediate economic challenges.
The president will sit at the top of a vertical power structure marked by a slimmed-down government with 16 ministries instead of 26 and multiple bodies reporting to him.
In one of the most significant changes, the European Union affairs ministry, set up in 2011 to oversee Turkey's faltering bid to join the bloc, is being subsumed into the foreign ministry. He is expected to become speaker of the new parliament.
After the inauguration, Erdogan will immediately turn to foreign policy, visiting northern Cyprus and Azerbaijan, both traditional first ports of call for a newly elected Turkish leader.
No major Western leader featured on a list of 50 presidents, prime ministers and other high-ranking guests.
The lira, which has lost almost a fifth of its value against the dollar this year, dropped almost 3 percent to 4.74 to the dollar minutes after the cabinet announcement.
Turkish Presidential Press Secretary Ibrahim Kalin.
Meanwhile Mevlut Cavusoglu remains in his post as foreign minister.
The markets will keep a close eye on economic appointments, keen to see a steady hand at the helm in a fast-growing economy dogged by double-digit inflation and a widening current account deficit.
Mr Erdogan, who was re-elected last month, vowed to "propel our country forward" with his sweeping new powers.
His Justice and Development (AK) party and its ally the Nationalist Action party (MHP) hold a majority in the legislature.
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