The new emblem -- with roots in feudal Japan -- was created by Tokyo-based designer Asao Tokolo and features a circular indigo-coloured Japanese traditional chequered pattern above the words "Tokyo 2020" and the Olympic rings.
Its three varieties of rectangular shapes represent "different countries, cultures and ways of thinking", organisers said in a statement.
"I don't know what to say, my mind's gone blank," a blushing Tokolo told a news conference. "The Olympic logo is a traditional design resembling a snake's eye and the other (Paralympic) is shaped like patterns often used by feudal warlords."
Tokyo organisers were forced to ditch a logo by Japanese designer Kenjiro Sano last year following allegations it too closely resembled that of a theatre in the Belgian city of Liège created by designer Olivier Debie. Sano denied any plagiarism.
Officials insisted their decision had not been in response to a lawsuit filed by Debie but a loss of public confidence as Tokyo organisers lurched from one crisis to another.
"It has been a tough process," said Ryohei Miyata, head of the Tokyo 2020 emblem committee, after Tokolo's artwork was chosen from a shortlist of four finalists.
However, reaction to the new Olympic and Paralympic logos - the latter resembling a bread basket in shape - was underwhelming, with many unhappy at its lack of colour.
"What a dull emblem," tweeted one user, with another dismissing it as a "bistro tablecloth".
The shortlisted designs were checked against registered trademarks in cooperation with the International Olympic Committee, jittery organisers insisted, wary of further embarrassment.
The logo controversy last year came shortly after Japanese Prime Minister Shinzo Abe pulled the plug on plans for a 1.8-billion-euro Olympic stadium amid public anger over spiralling costs. In the face of mounting criticism, organisers opened the selection process to the public -- rather than limiting it to a small group of professional designers -- in a bid to improve transparency.
But their thunder was stolen somewhat when the identity of the winning design appeared to be leaked to Japanese media, causing a stir among journalists awaiting the announcement.
The losing designs featured images of a morning glory flower, an athlete crossing a finish line and a multi-coloured ring symbolising harmony.