The 56-year-old is taking over from Jaap de Hoop Scheffer, a Dutchman.Ahead of the April Nato summit, Mr Rasmussen appeared to have the backing of heavyweight Nato members, notably the US, UK, France and Germany.
But Turkey remained a significant obstacle. Turkish Prime Minister Recep Tayyip Erdogan told Mr Rasmussen personally about the "serious indignation" in Muslim countries over his stance on the row over cartoons of the Prophet Muhammad in 2006.
'No comment'
Mr Rasmussen, a liberal who has led three consecutive centre-right governments in the last eight years, had repeatedly refused to comment on his candidacy, or even confirm he was in the running.
However, his reticence is believed to have been a tactical move to avoid interfering in any of the diplomatic efforts behind closed doors, rather than signalling a lack of interest in the post.
Mr Rasmussen faces a challenging time at the helm of Nato, with the war in Afghanistan proving costly and arduous and the alliance debating whether to take in more ex-Soviet countries.
But after more than seven years as prime minister, he is considered a veteran of international politics, with a reputation for meticulous planning and strong communication skills.
Deal maker
Mr Rasmussen brings considerable experience to the table.
When Denmark held the rotating EU presidency in 2002, it was Mr Rasmussen who led the complex negotiations which resulted in 10 European countries joining the EU in the union's biggest enlargement to date.
A personal friend of former US President George W Bush, Mr Rasmussen was one of the foreign leaders who most strongly supported the US-led "war on terror".
Under Mr Rasmussen, Denmark not only supplied troops for the invasion of Iraq in 2003, but also sent 700 soldiers to fight under the Nato banner in Afghanistan.
However, his support for the US in Iraq and Afghanistan and his uncompromising stand in the row over Danish cartoons mocking the Prophet Muhammad severely damaged his standing in the Muslim world.
Mr Rasmussen has all along refused to apologise for the controversial cartoons published in a Danish newspaper in 2005.
He has stressed the freedom of the Danish press and said it was not for him to limit or judge what the press published.
Muslims who opposed the cartoons said his tough stance on the matter completely disregarded Islamic sensitivities.
Facebook-friendly
In recent years, Mr Rasmussen has led diplomatic efforts to get major countries such as the US, China, India and Brazil to back a new UN climate agreement, to succeed the 1997 Kyoto Protocol.
The goal is to sign the deal in Copenhagen in December 2009, at a global climate summit. But tough negotiations lie ahead. Mr Rasmussen is also known for being media-savvy. He was quick off the mark in embracing social networking sites on the internet.
He was the first top European politician to use Facebook, the popular networking service, to engage with voters. He now boasts 12,000 Facebook friends.
His wife also joined the ranks of celebrity this year when she participated in a television dance show. She has since quit her job in childcare.
The couple have two daughters and one son. They regularly go on holiday in France.
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