Welsh, whose nomination as the Air Force's top officer was approved by the Senate Armed Services Committee on July 26, is the Air Force's 20th service chief since 1947.
"I am depending on Mark to call it the way he sees it," Panetta told the crowd at Joint Base Andrews.
"His character, his experience, his judgment will serve him well as the United States confronts a complex range of threats and challenges that will require us to maintain unquestioned dominance of the skies, dominance of space and dominance of cyberspace," he added.
Welsh's vast experience, which included a stint as the associate director for military affairs at the CIA and most recently head of U.S. Air Forces-Europe, has more than prepared him to take the service's top slot, Air Force Secretary Michael Donley said during Friday's ceremony.
"Without a doubt, Mark is an officer with a broad range of military experience and professional acumen, grounded with the core values and the character that make him ready to lead this world-class institution," Donley said.
Even though the event was focused on Welsh's ascension to the top of the Air Force ranks, Pentagon and service officials also took time to praise Schwartz's efforts during his time as service chief.
During his tenure, Schwartz "forged an enduring legacy as an airman, a mentor and a leader," Chairman of the Joint Chiefs of Staff Gen. Martin Dempsey said.
Under his leadership, the retiring four-star general "inspired trust within the Air Force, among his fellow service chiefs, within and across our government, and with our allies and partners," Dempsey said.
"You've built a hell of an Air Force," he added. "And, [Gen. Welsh], I know that you will continue to build it to be what it needs to be for the nation."
While Welsh's ability to transition the Air Force out of over a decade of constant combat in Iraq, Afghanistan and elsewhere was never in doubt by service and DOD leaders, his nomination was put into question by a growing sexual assault scandal.
Sen. John Cornyn (R-Tex.) placed a hold on Welsh's nomination over the Lackland Air Force Base sexual assault scandal, in which 15 basic training instructors are accused of sexually assaulting 38 victims.
Cornyn said in July he didn’t feel the Air Force was adequately addressing the scandal at the Texas base, and he used the hold as a way to lock in a face-to-face meeting with Welsh about the issue.
The Texas Republican eventually lifted his hold on Welsh's nomination after meeting with the incoming Air Force leader on Aug. 2, and the Senate voted to confirm him later that day.
At the time, Cornyn told The Hill he had a “very good meeting” with Welsh and was satisfied with his attitude toward Lackland.
“He shares my concerns and commitment to follow it wherever it may lead and implement policies that hopefully prevent it from happening again,” Cornyn said.
That said, Cornyn also told Welsh that he felt the Air Force has the worst congressional relations of all the services.
“Of course he wasn’t aware of any of that, but he listened carefully and I’m satisfied he will do everything in his power to fix it,” Cornyn said.