Malcolm Offord, who unsuccessfully stood for the Scottish Parliament in May, received a peerage to enable him to take the UK Government role.
The appointment of the financier as a junior minister at the Scotland Office after failing to be elected for the Lothian region was criticised by political opponents.
The Greens branded it a “disgrace” while the SNP condemned the “rampant cronyism” in the Tory Government at Westminster.
But Scottish Secretary Alister Jack welcomed the appointment, saying he would “bring to bear a wealth of valuable business experience” as the nation recovered from the Covid-19 pandemic.
Lord Offord of Garvel wore the traditional scarlet robes for the short introduction ceremony in the upper chamber where he swore the oath of allegiance to the Queen.
The 57-year-old was flanked by supporters and fellow Tory peers Lord Forsyth of Drumlean, the former Scottish secretary, and Lord Kirkham.