Ismail took oath before President Abdel-Fattah El-Sisi, Xinhua news agency reported.
The new cabinet includes 15 new faces, with the ministers of foreign affairs, defence, interior, justice and finance retainining their portfolios.
On September 12, Sisi accepted the resignation of the cabinet headed by Prime Minister Ibrahim Mehleb, after agriculture minister Salah Helal was arrested for corruption.
It is the first major reshuffle of administration since Sisi won an election last year, which is expected to "pump new blood" into the government.
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The new cabinet was sworn in as Egypt is preparing for a long-delayed parliamentary election in October.
Electing a new parliament, which Sisi promised to be completed by end of 2015, is the final phase of a three-stage road-map, including the presidential election and the new constitution announced by Sisi on the removal of former Islamist President Mohamed Morsi in early July 2013.