After Supreme Court Chief Justice Khilraj Regmi was sworn in by President Ram Baran Yadav, he named Madhav Ghimire as the home minister and Hari Prasad Neupane as law minister. Both Ghimire and Neupane are former bureaucrats and took the oath of office with Regmi.
The agreement signed late on Wednesday night among leaders of the four main political parties says Regmi will have an 11-member Cabinet and the interim government would hold elections by June 21.
The vote would choose a new Constituent Assembly to write a constitution and double as the country's parliament. The assembly elected in May 2008 expired last year after failing to complete the charter because of political disagreements.
The feuding parties agreed to appoint Regmi after failing to agree on a choice among their politicians.
Since the last assembly tenure ended in May 2012, Baburam Bhattarai, of the Unified Communist Party of Nepal (Maoist), has remained the head of caretaker administration.
Elections set for November 2012 were canceled because of the squabbling.
Regmi, 63, has remained free of controversy in his two years as chief justice, until now. The Nepal Bar Association and some of the smaller parties have criticized the arrangement as inappropriately mixing law and politics. Some of the opponents have threatened to organize street protests.
Maoist rebels in Nepal fought government troops between 1996 and 2006 until they gave up their armed revolt and joined a peace process that evolved after the Himalayan nation abolished its longstanding monarchy. They emerged as the largest political party in the 2008 Constituent Assembly, but no party got a clear majority. Four different prime ministers assumed power in the next four years. Differences among the political parties have been blamed for the delays in the peace process and in the writing of a new constitution for Nepal.