Dame Patsy, a lawyer who has held a number of board positions, has had a strong involvement in the arts and was chair of the Film Commission.
A powhiri and haka greeted Dame Patsy and Sir David as they arrived for the pomp of her official swearing in as Governor-General.
Dame Patsy took the Royal Salute and inspected a guard made up of personnel from the Navy, Army and Air Force.
Titanic and Avatar director James Cameron has praised New Zealand's new Governor-General and his former next door neighbour as an "astonishingly talented and competent woman".
Cameron attended the swearing-in ceremony for Dame Patsy Reddy at Parliament today along with fellow Hollywood heavyweight Sir Peter Jackson and other guests and dignitaries.
Speaking to the Herald as he left a reception in Parliament's banquet hall with his wife Suzy, Cameron said he was thrilled with his friend's appointment as New Zealand's 21st Governor-General.
New Zealand's new Governor-General, Dame Patsy Reddy. Zealand Herald Photograph by Mark Mitchell.
The pair became friends with Dame Patsy and her husband Sir David Gascoigne after owning property next to each other in the South Wairarapa.
"We got to be quite chummy out there. She and her husband Sir David Gascoigne would come over for dinner and vice versa. We would pop down there and Suzy and Patsy got to be quite good mates."
Cameron said he knew Dame Patsy had big plans for the position.
"She is absolutely an astonishingly talented and competent woman. And she has got a big vision of what she can do as Governor-General.
"I know she will do a good job. She has done a good job with everything she has ever done, and she has done an awful lot of things."
Dame Patsy Reddy and Professor Piri Sciascia, Maori advisor to the Governor-General.
A powhiri and haka greeted Dame Patsy and Sir David on Parliament's forecourt, before the Queen's new representative took the Royal Salute and inspected a guard made up of personnel from the Navy, Army and Air Force.
A 21-gun artillery salute from Point Jerningham across town in Roseneath sounded over Wellington, and the New Zealand Opera Chorus standing on Parliament's steps sang Hine e Hine.
Cameron, a Canadian, has been responsible for films - Avatar, Aliens and The Terminator - that have helped shape modern cinema. So what did he make of the pomp of today's ceremony?
"I think it is such an almost surreal juxtaposition of the very English - very Royal and precise - with the Maori - kind of tribal and very emotional.
"And I love that juxtaposition. And it's funny, because that kind of defines the full spectrum of this country and it's kind of national soul."
The Governor-General, Dame Patsy Reddy, flanked by the Chief Justice, Dame Sian Elias, and the NZ Herald pf Arms, Phillip O'Shea. Photo / Mark Mitchell
Before becoming neighbours (Dame Patsy has since moved to Greytown), Cameron said he knew the new Governor-General through the film business - Dame Patsy has had a strong involvement in the arts and was chair of the Film Commission.
"As head of the Film Commission she was pretty directly responsible for the incentives that helped us bring the Avatar sequels here," he said.
"The crazy thing is she has been pivotal to my business interests here in New Zealand. And just by a pure lightning stroke happened to be our next door neighbour...I mean literally a couple hundred metres from us, she was the closest house."
Earlier today, Prime Minister John Key told the crowd gathered for the swearing-in that Dame Patsy's appointment sent a strong message about New Zealand valuing women in leadership roles.
The Governor-General, Dame Patsy Reddy, inspecting the honour guard during her swearing-in ceremony at Parliament. NZ Herald photograph by Mark Mitchell.
Dame Patsy said she wanted to emulate the two other women to hold the position - former Auckland Mayor Dame Catherine Tizard (Governor General from 1990-1996) and former Judge Dame Silvia Cartwright (2001 to 2006).
"Dame Cath and Dame Sylvia challenged norms and expectations by stepping into public leadership roles at a time when women were not easily accepted as leaders.
"Their success helped shape a world where young women and men can forge a path in whatever career they choose."
Four themes would guide her own time as Governor-General, Dame Patsy said - creativity, innovation, leadership and diversity.
"I take on this opportunity with some trepidation. But also with enthusiasm and commitment."
Dame Patsy replaced Sir Jerry Mateparae, who was given a state farewell last month as his five-year term ended on August 31.
She made her name in corporate governance, serving on private and public sector company boards over the past 20 years.
Most recently she worked on the review of the intelligence agencies with former Deputy Prime Minister Sir Michael Cullen.
Her husband, Sir David, is a former lawyer and former Judicial Conduct Commissioner. He is a former chairman of law firm Watts and Patterson, which became Minter Ellison Rudd Watts. Dame Patsy worked at Minter Ellison too.
The couple will have two official residences, one in Wellington and one in Auckland. As a constitutional monarchy, New Zealand's head of state is the Queen and the Governor-General is her representative in New Zealand.
The Governor-General acts on the advice of ministers of the Crown and does not initiate actions or get involved in political debate.
They appoint a Prime Minister after an election, based on public knowledge of which political leader can command a majority in the House.
The role also involves a lot of work with charities and communities, as well as entertaining visiting dignitaries at Government House in Wellington and Government House in Auckland - occasionally members of the royal family.
In recent years it has also involved more diplomacy in representing New Zealand at events overseas.
Dame Patsy Reddy
• Recent work: Co-reviewer of New Zealand intelligence agency legislation with Sir Michael Cullen.
• Chair of Film Commission, deputy chair of NZ Transport Agency, chief negotiator for Treaty settlements in Bay of Plenty.
• Barrister and solicitor, professional director 20 years. Former partner in law firm Minter Ellison Rudd Watts and former law lecturer.
• Married long-term partner Sir David Gascoigne in March. Sir David is a former Judicial Conduct Commissioner. The pair are Wellington-based but also have a property in the Wairarapa and were neighbours of film director James Cameron (Dame Patsy has subsequently moved to Greytown).
