“It's a plural government, a coalition government whose firm intention is unity,” he told reporters after formally submitting the government lineup to King Felipe VI.
The country's first coalition government since the return of democracy in 1975 “will be informed by different ideas but will go in a single direction”, said Sanchez.
“It will speak with several voices but always with the same message,” he said of his lineup, which will be sworn in on Monday.
As recently as September he was claiming that joining forces with Podemos would cause him sleepless nights.
But the deal allowed Sanchez to take the oath of office last week for a second term after parliament narrowly confirmed him — thanks in part to the abstention of the Catalan separatist party the ERC.
In exchange, the ERC extracted from the Socialists an agreement for negotiations between the central and Catalan governments on the future of the wealthy northeastern region.
Sanchez said his government would be one of dialogue and coexistence rather than discord.
The political situation in Catalonia remains in flux following a failed 2017 independence bid that triggered Spain's worst political crisis in decades.
The crisis had been the major stumbling block between the Socialists and Podemos.
Sanchez was forced to enter into the coalition after the Socialists emerged weakened from November's legislative elections, which also saw a surge for the far-right Vox party.
Podemos leader Pablo Iglesias will be one of the government's four deputy leaders, with the social rights portfolio. Four other Podemos members have also been given cabinet positions.
Spain's right wing, as well as Vox, are fiercely opposed to the agreement between Sanchez and a part of the Catalan separatists.
On Sunday, thousands of Vox supporters protested in Madrid and other cities against what they called a government “in the hands of separatists”.
Spain has been gripped by political instability since the December 2015 election, which saw the emergence of Ciudadanos and the far-left Podemos, ending three decades of bipartisan hegemony by the Socialists and conservative Popular Party (PP).