Sheikh Hasina's Awami League party won a landslide victory in general elections last week that were hailed as "free and fair" by independent observers.
Campaigning and voting were generally peaceful, in marked contrast to the unrest that caused polls to be cancelled in 2007, when at least 35 people died in violence over allegations of vote rigging.
The unrest brought the country to a standstill, leading the then president to declare a state of emergency, and the army stepped in to impose an interim authority that held power until Tuesday.
Sheikh Hasina, 61, won 230 seats out of a possible 300, giving the Awami League a clear majority to govern without forming a coalition.
However the premier-elect, who also ruled between 1996 and 2001, has indicated she wants to end the confrontational politics that has paralysed Bangladesh's political system for decades.
"I feel in the parliamentary system we can work together. I am ready to work with everyone," she said following her victory.
Both Hasina and her bitter rival, ex-premier and leader of the Bangladesh Nationalist Party (BNP) Khaleda Zia, were jailed for a year by the outgoing army-backed government on corruption charges.
After initially rejecting the crushing election results, Zia said she would work with Sheikh Hasina -- though she stood by allegations of voter fraud.
The women, nicknamed the "battling begums" for their intense personal rivalry, have dominated Bangladesh's political scene for the past two decades.
Authorities tried to exile them, but failed and later released them so they could take part in last week's elections.
Held under tight security, the first polls since 2001 attracted a turnout of 87 percent, with both leaders seeking to woo voters by expressing remorse over their past records.
One corruption charge against Sheikh Hasina, over the alleged extortion of 30 million taka (440,000 dollars) from a power company chief, was dropped only on Monday.
She still faces around 10 cases, according to her lawyer, including a charge of murder over the deaths of opposition party workers in the violent street protests two years ago.
Sheikh Hasina -- nicknamed the "daughter of democracy" as her father, Sheikh Mujibur Rahman, led the country's struggle for independence -- has vowed to make the fight against poverty the priority of her administration.
Bangladesh is one of the poorest nations on the planet with 40 percent of its 144 million people living on less than a dollar a day.
It has a long history of coups and counter-coups since winning independence from Pakistan in 1971.
The Awami League and the BNP have often been accused of anti-democratic tactics, with both regularly boycotting parliament and staging national strikes when in opposition.
Zia's party was expected to boycott the swearing-in ceremony on Tuesday.