Massoum, 76, a veteran politician, fought as a guerrilla against Saddam Hussein, and replaces Jalal Talabani, who was regarded as a unifying force in Iraq's fractious government until he suffered a stroke in 2012.
The election clears the way for choosing a prime minister. While Nouri al-Maliki has held that position since 2006 and is seeking re-election, many legislators view him as a divisive figure in a country beset by ethnic disputes, disagreements between Muslim sects, and open warfare.
Iraq has essentially been partitioned: northern Kurds are making arrangements for a referendum on independence and gradually withdrawing from government positions; Shiite Muslims control Baghdad and the southern part of the country; and a Sunni-led "Islamic State" occupies the middle.
Massoum's election comes a week after Salim al-Jubouri, a Sunni Muslim regarded as a moderate, was installed as the Parliament's speaker.
Massoum is "a moderate man and was agreed to by everyone," said legislator and Shiite Abbas al-Bayati. "A man who refuses divisions, and this is what we look for in the Iraqi president."
Political analyst Hashim al-Hashimi noted, "This is for sure a great achievement. Now the road is paved to nominate the prime minister and form the government."