Archbishop Dominique Lebrun, who oversees the small town of Saint-Etienne-du-Rouvray where Fr Hamel was killed, said fear had spread throughout France after the attack.
But he added mass attendance had gone up since the two young men who claimed allegiance to ISIS stormed into the service and killed the priest.
"There is fear [in France], without a doubt," he said after a meeting with Pope Francis on Wednesday.
"A week ago, I met with the vicars of the diocese and everyone told me that some people phoned asking if there was mass, if they could go, if there [was] a risk.
"At the same time, more people are at mass. On a psychological level, there is fear, but on a deep level in the soul, there is strength."
The Archbishop celebrated mass with the Pope and around 80 Catholics from Rouen who had made the trip to Rome. Francis delivered a direct homily where he repeatedly said Hamel had been martyred.
"He accepted his martyrdom there on the altar," the Pope said. "He is a martyr and martyrs are beatified."
Beatification is the first major step towards canonisation and sainthood within the Catholic Church so the remarks strongly indicate Pope Francis intends to make Hamel a saint.
Usually a miracle has to be attributed to someone before they are beatified but that is not always the case if they have been martyred.
The normal procedures for becoming a saint can also be accelerated or waived by the Pope if he deems them particularly significant.