MacLauchlan became Liberal leader at a convention in Charlottetown on Saturday and was sworn in as premier during a ceremony at Government House.
He was unopposed for the leadership of the Liberal party, which holds 23 of the 27 seats in the legislature.
MacLauchlan also announced a smaller cabinet, shrinking it to eight members from the 11 ministers Ghiz had in his government.
In addition to being premier, MacLauchlan will also serve as the minister of finance and energy, aboriginal affairs and intergovernmental affairs.
Seven members of Ghiz's cabinet remain in their current roles or take on an additional portfolio.
MacLauchlan, 60, also becomes chairman of the Council of the Federation, which is made up of all Canadian premiers.
He jumped into politics following a career as a lawyer and academic, including more than a decade as president of the University of Prince Edward Island.
One of the first major decisions MacLauchlan will have to make is whether to seek a seat in the legislature in a byelection or call a general election. P.E.I.'s next election can take place as late as April 2016, but there is speculation MacLauchlan could move that forward to this spring.
When he became leader of the party on Saturday, MacLauchlan said his government will focus on the economy, open government, citizen engagement and dealing challenges created by the province's aging population.
The Progressive Conservative party in P.E.I. will elect a new leader on Saturday. There are three candidates seeking the party's leadership.
A list of P.E.I. Premier Wade MacLauchlan's cabinet:
— Wade MacLauchlan, premier, minister of finance and energy, minister responsible for aboriginal affairs, minister responsible for Acadian affairs and minister of intergovernmental affairs.
— George Webster, deputy premier and minister of agriculture and forestry.
— Doug Currie, minister of health and wellness and minister responsible for municipal affairs.
— Valerie Docherty, minister of community services and seniors, and minister responsible for the status of women.
— Janice Sherry, minister of environment, labour, justice, and attorney general.
— Robert Henderson, minister of tourism and culture.
— Alan McIsaac, minister of education and early childhood development, and minister of transportation and infrastructure renewal.
— Allen Roach, minister of innovation and advanced learning, and minister of fisheries, aquaculture and rural development.