Rachel Treweek, 52, the former Archdeacon of Hackney in the Diocese of London, has become the new Bishop of Gloucester.
Two women bishops have already been appointed, but Mrs Treweek is the first woman to run a diocese and is one rank below archbishop.
She succeeds The Right Reverend Michael Perham, who retired last year.
Hundreds of representatives and clergy from churches across Gloucestershire were in attendance to welcome the new bishop to the diocese.
She joined a procession to the cathedral before being consecrated by the Archbishop of Canterbury and giving her first sermon.
The new bishop wore a cross made in Mozambique out of spent cartridges from the country’s civil war.
She said it is a reminder of the time she spent in Africa and her commitment to peace building.
‘Joy and privilege’
Mrs Treweek said it was „an immense joy and privilege” when she was appointed to the role in March.
The Church formally adopted legislation to allow women bishops last November.
„I’ve always been someone who has felt people should be able to respond to God’s call in who they fully are – this is exactly where Jesus is calling me,” she told Clare Balding on Radio Two’s weekly topical faith show.
„It’s exciting and terrifying,” she said.
„I want to be someone who builds good relationships with people, who listens and wants to engage with their hopes and concerns.
„But above all I want to be seen as a strong follower of Jesus who confidently talks about Jesus’s hope and love.
„One of our challenges in the Church of England at the moment is to talk more confidently about Jesus Christ – people are very good at living out Christ’s hope and love but not so good at talking about why they live as they do.
The new bishop will be enthroned in Gloucester cathedral on 19 September.