Bola Tinubu said the decades-long subsidy on petroleum products was being scrapped.
He won disputed elections with a promise to renew hope - but he faces tough economic and security challenges.
It is not clear when the new policy will kick in, but ending the subsidy will lead to a rise in the price of petrol and could have a knock on effect on other prices.
Previous Nigerian governments have tried and failed to end the subsidy that was first introduced in the 1970s.
Despite its oil wealth, Nigeria is unable to refine enough crude to meet local demands so it imports petroleum products, which are then sold at a government-set price.
But the subsidy is a huge drain on public finances. Last year it gulped 4.3trn naira ($9.3bn; £7.5bn) and for the first half of this year, 3.36trn naira was budgeted for it.
The new president said the subsidy could no longer be justified and that the funds would instead be spent on public infrastructure and to improve the lives of people.
Source: www.bbc.com
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