Elected for a second five-year term in the first round of voting, his skills will swiftly be put the test even though his position is largely ceremonial.
"The country needs stability, calm and tranquility," he said a few days before the poll. "I have no appetite for using the atomic bomb."
The bomb reference alluded to the fact that the president has the power to dissolve parliament and call new elections.
Cavaco Silva is likely to face pressure to do just that if Prime Minister José Socrates' government needs to seek a bailout from the European Union and the International Monetary Fund.
For now though, he backs Socrates' strategy of cutting the deficit though austerity measures in the fight to pull Portugal out of the eurozone debt crisis.
Aged 71 and with a patrician bearing, Cavaco was prime minster from 1985 to 1995 - the longest rule of any democratically-elected Portuguese leader.
He was an economics professor at Portugal's top universities with a doctorate from Britain's York University before becoming politically active following the 1974 Carnation Revolution, which restored democracy to Portugal.
As finance minister in 1980-81, he began to liberalise the economy and dismantle regulations. Elected as prime minister in 1985 at the head of a Social Democrat minority government, he won popularity as Portugal enjoyed a period of tax cuts, high employment and growth.
He steered Portugal into the European Union in 1986, a move that brought generous EU funds to Western Europe's poorest country.
Cavaco Silva won an emphatic election victory in 1987 and again in 1991 but his popularity ebbed as harder economic times began to bite.
Losing a 1996 presidential election to Socialist Jorge Sampiao, he went back to teaching and served as an adviser to the Bank of Portugal.
Returning to politics, he ran successfully for president in 2006 and followed a path of "strategic cooperation" with Socrates, saying that partisan politics should not get in the way of solving the nation's problems. That relationship has come under strain, though, as the crisis has deepened.
During campaigning for the 2009 general election, when Socrates won a second term, a scandal broke out over newspaper allegations that the government had bugged the presidential palace.
A committed Roman Catholic, Cavaco Silva angered many conservatives and fellow Catholics last year when he refused to use his veto powers on legislation authorising gay marriages. He said that he had to put his personal convictions aside in approving the law.
His critics, including his rival for the presidency, Socialist Manuel Alegre, have accused him of grandstanding with his professed wish to be seen as leader of all the Portuguese people.
(EurActiv with Reuters.)
