Standing alongside President Peter Mutharika, she unveiled a plaque to mark the completion of the 50-bed facility in Malawi's second city of Blantyre.
The Mercy James Institute of Paediatric Surgery and Intensive Care - named after one of her children - has taken two years to build and includes three specialist operating theatres.
It is the first health unit for children in the southern African nation, and will doubled the capacity for paediatric care at the Queen Elizabeth hospital.
Madonna, who set up her 'Raising Malawi' charity in 2006, was greeted by traditional dancers and given a one-hour tour of the hospital, which was decorated with national flags and bunting.
The wards have been designed with murals including images of Nelson Mandela and archbishop Desmond Tutu, while US actor Leonardo DiCaprio was listed on a wall as a major benefactor.
Mutharika cut a blue ceremonial ribbon, and held it up to the cheering crowd.
Madonna has not always been welcomed with open arms in one of the world's poorest countries, where some activists accuse her of using her wealth to short-cut the adoption process.
In 2013, she was stripped of her official VIP status in Malawi by then president Joyce Banda's government, which accused her of being 'uncouth' and expecting gratitude for her adoptions.
President Mutharika has since moved to repair the relationship, previously saying his government had 'always been grateful for the passion Madonna has for this country'.
'Malawi needs such kind-hearted people to prosper,' Malita Ndau, a 20-year-old woman selling doughnuts in Blantyre, told AFP. 'Malawian children will now have a chance of survival because of this hospital.'
The new hospital wing opened to patients last week and has already performed its first surgery.
From AFP Via Yahoo! News