The 44-year-old was formally appointed to the role in Wellington, a week after Jacinda Ardern's shock resignation.
Ms Ardern, 42, had said she no longer has "enough in the tank" to lead the country. The country's governor-general Cindy Kiro accepted her formal resignation on Wednesday.
Mr Hipkins built a reputation as the minister who led New Zealand's Covid-19 strategy.
At the ruling Labour Party's caucus over the weekend, Mr Hipkins received unanimous support to be promoted to lead the country, and now faces the uphill task of retaining power in the upcoming general elections in October.
Opinion polls have suggested that his party is trailing its conservative opposition, the National Party, in popularity.
The country of five million was among the first to close borders. This move won plaudits for keeping New Zealand virus-free early in the pandemic, but frustration set in later among the Kiwis tired of the zero-tolerance strategy, which saw nationwide lockdowns over a single infection.
Mr Hipkins previously conceded that strict lockdowns should have been scaled back earlier.
Source: www.bbc.com
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