It is the SDLP's turn to hold the position and the party nominated the north Belfast councillor last week.
The decision was ratified at a full meeting of Belfast City Council on Monday night.
Maire Hendron of the Alliance Party has been elected deputy mayor - the first time women have held the two top posts.
Ms Mallon, 34, said being chosen as lord mayor was a tremendous honour.
"I want to congratulate Máirtín Ó Muilleoir on a fantastic year in office and thank my own party for nominating me to take on such a privileged position," she said.
"I have had the privilege of representing the Oldpark area, the place I grew up in, for the last four and a half years.
"The most wonderful part of being a councillor, for me, continues to be the many unsung heroes I get to meet - all those people who through their compassion and selflessness, makes this city the special place that it is."
She said she wanted to take the lord mayor's role "out of city hall and into people's lives".
"I want to connect with those who at times feel invisible in our city. I want to celebrate and showcase our unsung heroes who really are Belfast's first citizens," she said.
"Belfast is a city for everyone, where everyone belongs and where we are all the better for having each other."
Ms Mallon is only the third woman to hold the office of lord mayor of Belfast, following the Ulster Unionist Party's Grace Bannister in 1981 and Naomi Long of the Alliance Party in 2009.
With Lydia Patterson of the DUP also serving as high sheriff, it is the first time that all three civic dignitaries in Belfast are women.
After her appointment, the city's new deputy lord mayor said she was "looking forward to the year ahead".
Ms Hendron added: "During my year in office, I would hope to play my part in building a more inclusive city that is open to all.
"I want to work with all groups from different backgrounds to further improve Belfast's diversity, which is a source of strength for our society."
The SDLP's Nichola Mallon has become the new lord mayor of Belfast, succeeding Sinn Féin's Máirtín Ó Muilleoir.