The Liberals lost badly to Prime Minister Stephen Harper's ruling Conservatives, putting in their worst performance since 1984, but Dion said he had no plans to step down.
"Canadians are asking me to be the leader of the opposition and I accept that responsibility as an honor," he told a rally of supporters in Montreal.
While the Liberals remain the largest opposition party, Harper beefed up his minority position as the Liberals lost ground to both the Conservatives and left-leaning New Democratic Party.
"Canadians are asking me to carry the Liberal values with a team that is less numerous but that is hardened and determined," Dion said in French.
Dion said he will act responsibly to ensure parliament works at a time of economic crisis.
Dion, 53, was in his first electoral race as leader of the Liberals. The former environment minister was a compromise candidate who came from nowhere to beat the two front-runners at the December 2006 leadership convention.
Dion made a carbon tax to reduce greenhouse gases a major thrust of his campaign platform, but the Conservatives worked to make the proposal a liability for the Liberals, painting it as a threat to an already vulnerable economy.
Dion also struggled in the campaign in his public use of English, which is not his first language.
"Dion is going to be under a lot of pressure," said University of British Columbia political scientist Allan Tupper, who believes Conservatives knew they could force Dion out as Liberal leader when they called the election.
Tupper noted that Dion's major rivals for the leadership -- deputy Liberal leader Michael Ignatieff and former Ontario Premier Bob Rae -- both won reelection.
Both Rae and Ignatieff said it was premature to speculate on whether the Liberals would now have a leadership race. The party is scheduled to hold a national convention in late spring.
