Mufti, 56, was administered the oath of the office by Governor N.N Vohra.
She becomes the 13th chief minister of the state, ending over three months of governor’s rule.
Mufti would be the first woman chief minister of India’s only Muslim majority state.
Sources in the two parties have confirmed that two former ministers from the PDP and three from the BJP were being ‘dropped’ by the alliance.
It is also reliably learnt that while most of the faces in the Mufti Muhammad Sayeed-led government are being repeated in the council of ministers led by his daughter, there is going to be major re-allocation of portfolios among the new team of ministers.