It is the first time the MDC has won more seats than Mugabe's party since Zimbabwe became independent from Britain in 1980.
Paul Themba Nyathi, a candidate put forward by a rival MDC splinter group, came second with 98 votes.
Zanu-PF, the governing party, did not put forward a candidate.
The vote was the first time the Zimbabwean parliament had met since disputed parliamentary and presidential elections in March which led to ongoing political unrest.
MDC in control
The MDC now controls parliament for the first time, but Morgan Tsvangirai, its leader, continues to claim Mugabe fixed the result of the presidential election and used violence against MDC supporters.
Two MDC MPs were arrested as the parliament prepared to meet.
Shuah Mudiwa, the member of parliament for Mutare West, and Elia Jembere of Epworth, were arrested by police as they were arriving for the swearing-in.
"It's clearly a strategy to eliminate our members and reverse our majority in parliament," Nelson Chamisa, the spokesman for the MDC, said.
Wayne Bvudzijena, a police spokesman, said that he was unaware of the arrests, and added: "It would be illegal for anyone to be arrested while they were proceeding to parliament".
MDC members sat on benches that had been occupied by their Zanu-PF rivals until they lost the majority in parliament in elections in March, heckled members of the party, shouting: "You sit on that side. You are now in the opposition."
Representatives of Tsvangirai and Mugabe are continuing to negotiate over how to share power to resolve their long-running dispute.