Dr Rachel Levine, 63, is now an admiral of the US Public Health Service Commissioned Corps.
Dr Levine, appointed by President Joe Biden, is already the highest-ranking openly transgender official in the US.
She described the occasion as "momentous" and "historic" during a swearing-in speech on Tuesday.
"May this appointment today be the first of many more to come, as we create a diverse and more inclusive future," she said in a speech that paid tribute to other LGBTQ individuals who came before her.
Dr Levine is a graduate of Harvard College and Tulane University School of Medicine and previously worked as a pediatrician.
The US Public Health Service Commissioned Corps has about 6,000 uniformed officers and is tasked with responding to health crises like the coronavirus pandemic and natural disasters.
Secretary of Health Xavier Becerra described Dr Levine's appointment to the job as a "giant step forward towards equality as a nation".
She also served as Pennsylvania's physician general and the state's secretary of health, working on issues like responding to widespread opioid addiction.
Dr Levine was confirmed as US assistant secretary for health in a 52-48 Senate vote in March.
During the confirmation process, the nominee faced questions over her handling of the coronavirus pandemic in nursing homes during her time as health secretary of Pennsylvania.
Critics blamed the deaths of many elderly people on a state policy that required nursing homes to accept Covid patients.
Shortly after implementing that measure, Dr Levine acknowledged having moved her own mother out of a care home as virus cases rose.