The treaty, which aims to make decision-making smoother, creates a long-term president and enhances the powers of the EU foreign policy chief, is intended to give the 27-country bloc more political clout to match its economic weight.
Portugal, which held the rotating EU presidency two years ago when the treaty was signed, held a ceremony for key EU officials on the banks of the Tagus River to mark the day.
"This is the day of the Treaty of Lisbon, a day of new beginnings," said Portuguese Prime Minister Jose Socrates.
"Today marks a new page in the history of European cooperation," said Swedish Prime Minister Fredrik Reinfeldt, whose country currently holds the rotating EU presidency. "We turn the page towards a European Union that can better cope with the challenges ahead of us. And we turn the page away from the mists of vagueness and uncertainty that for too long were allowed to dominate the European agenda."
But Reinfeldt also stressed the challenges ahead, saying the Lisbon Treaty provides "a toolbox" but is not "a solution in itself". "The Lisbon Treaty," he said, "is a commitment, not towards the Union, but towards all the citizens of Europe […] We must remember, that to maintain our legitimacy we must take on the new challenges facing Europe".
Briton Catherine Ashton started work immediately as foreign affairs chief. Belgian Prime Minister Herman Van Rompuy takes over as president of the Council of EU leaders on 1 January.
But the impact of the changes under the treaty will not be felt overnight and the EU has struggled to assert itself as emerging powers such as China become more influential following the global economic crisis.
"The construction of Europe needs to be legitimised at all times," Van Rompuy said, adding that the treaty was a "powerful tool for us to tackle the challenges of our time".
Although the Union is an important political and trading bloc representing nearly 500 million people, its leaders have often looked divided during the eight years it took to negotiate and ratify the Lisbon treaty.
They reached agreement on the appointment of Ashton and Van Rompuy only at the last minute last month, and critics say the choice of two leaders who are little known even in the EU raises questions about how the EU will raise its global profile.
"I think it is good that the rest of the world reminds us that they would welcome some people with ideas and some drive. Unfortunately it is not a widely felt view in the EU," said Daniel Gros of the Centre for European Policy Studies.
New rules
The Lisbon Treaty changes the rules on how decisions are reached by the EU because decision-making has become unwieldy since the accession of 10 countries, mostly from eastern and central Europe, in 2004 and two more in 2007.
It hands more power to the European Parliament, which shares some legislative responsibilities with the European Commission - the EU executive and a powerful regulatory body. Member states' leaders retain a lot of power.
"I'm delighted that we now have the right institutions to act and a period of stability, so that we can focus all our energy on delivering what matters to our citizens," said European Commission President José Manuel Barroso.
The Commission said the EU would now focus on "managing a smooth exit from the economic and financial crisis," which opinion polls suggest is the main concern of voters, many of whom regard the EU as out of touch with ordinary people.
Central to economic recovery will be reducing member states' bloated budget deficits and deciding when to stop emergency financial measures that were used to prop up the economy.
Gross domestic product is expected to rise by only about 0.7% in 2010 and official data show unemployment is expected to rise above 10% in the EU next year.
(EurActiv with Reuters.)
