Hundreds of supporters accompanied the nation's first Indigenous president as he crossed a border bridge to the town of Villazon, seen off Argentina's President Alberto Fernández, who came to bid him farewell.
“I didn't expect to return so soon,” Morales told the cheering crowd that met him.
Morales still faces charges of treason and sedition lodged by prosecutors under the conservative interim government that accused him of stirring violent protests and spent much of the past 12 months attempting to reverse his policies.
Morales' Movement Toward Socialism party also retained its majority in congress.
Indigenous supporters of Morales greeted him at the border with chants of, “Evo! Evo!" as he launched a planned three-day caravan to the Chapare region where he rose to prominence as a leader of coca growers.
Arce has downplayed suggestions that his mentor would play a major role in his administration, saying he would not govern “in the shadow of Morales,” but the 61-year-old former leader remains the nation's most prominent figure.
He has not spoken about his plans, though many believe he will try to use his sway.
“Morales will try to influence because Arce was his minister and he was the one who chose him as candidate,” said political analyst Carlos Cordero. ”With an opposition that has no great weight, Morales could be a political rival or a good collaborator for Arce,"
Once overwhelmingly popular, Morales saw his support erode over his refusal to accept limits on his ability to seek reelection and over allegations of increasing authoritarianism. Protests over alleged fraud roiled the nation when he claimed a narrow outright victory in the October 2019 presidential election, and he wound up resigning at the suggestion of military and police leaders.
Human Rights Watch has said the terrorism charges against Morales appear to be politically motivated, though it also accused Morales’ administration of similar judicial abuses.
Officials in the former government alleged that Morales had urged followers surrounding cities during protests against his ouster to cut off food supplies for inhabitants.
Meanwhile, newly inaugurated President Arce swore in 16 new cabinet ministers who will help him confront the COVID-19 pandemic as well as a sharp economic contraction.
It is heavy with technocrats and social leaders, but light on prominent members of his party — prompting protests from some, especially those from the party stronghold in huge, poor suburb of El Alto who had hoped for representation.
The Foreign Ministry went to a human rights lawyer with no diplomatic background while a university professor will lead the Economy Ministry and a cardiologist the Health Ministry.