In the splendor of St. Peter's Basilica, Benedict marked the birth of Jesus with a call to the faithful to help children who are denied the love of their parents and those who are exploited across the world.
"The Child of Bethlehem summons us once again to do everything in our power to put an end to the suffering of these children," he said.
Delivering his homily in Italian, Benedict recalled the plight of "street children who do not have the blessing of a family home, of those children who are brutally exploited as soldiers and made instruments of violence, instead of messengers of reconciliation and peace."
He also spoke of minors who are "victims of the industry of pornography and every other appalling form of abuse, and thus are traumatized in the depths of their soul."
The pope did not specifically mention the issue of lawsuits and other complaints brought in the United States and elsewhere by Catholics who allege they were sexually abused by priests when they were youngsters.
As he recalled the birth of Jesus in biblical Bethlehem, Benedict's thoughts turned to the Holy Land and the pontiff prayed for an end to the conflict between Israel and the Palestinians.
"Let us think also of the place named Bethlehem, of the land in which Jesus lived, and which he loved so deeply," he said. "Let us pray that peace will be established there, that hatred and violence will cease. Let us pray for mutual understanding, that hearts will be opened, so that borders can be opened."
Benedict is expected to visit the Holy Land in May for what would be the first papal trip to Israel and the Palestinian territories since the late Pope John Paul II traveled there in a 2000 pilgrimage.
As Midnight Mass began on Thursday, the 81-year-old Benedict, dressed in white and gold-colored vestments, walked in a procession up the basilica's main aisle, smiling and stopping several times to shake outstretched hands and bless children.
A a choir intoned a Psalm, as the pope sprinkled incense on the central altar under Bernini's towering bronze baldachin before opening the service with the traditional wish for peace in Latin: "Pax vobis" ("Peace be with you"). The faithful responded: "Et cum spiritu tuo" ("And also with you").
As Benedict left the basilica through the main aisle, a person who had jumped the barriers got close to the pope but was quickly blocked on the ground by security.
The Vatican's spokesman, the Rev. Federico Lombardi, said he did not know who the person was but added that the disturbance hadn't caused any problems.
"The Holy Father continued on his way calmly. I imagine it was someone who wanted to greet him or pay homage to him," Lombardi said by telephone. "I have no reason to believe he was armed."
Thousands of pilgrims, Romans and tourists packed the basilica for the midnight service. For those unable to enter there were giant screens set up in St. Peter's Square.
Earlier, as night fell on Christmas Eve, Benedict appeared briefly at his studio window to bless the crowd in chilly St. Peter's Square and light a single candle in a sign of peace.
The Vatican's Christmas festivities began with the unveiling of the larger-than-life Nativity scene next to the Vatican's largest-ever Christmas tree in St. Peter's Square. Children in red-and-white Santa hats sang Italian holiday hymns as the Vatican's Gendarmeria band played alongside.
On Thursday Benedict delivered his traditional Christmas Day "Urbi et Orbi" speech — Latin for "to the city and to the world" — from the balcony of St. Peter's, in which he touched on current events and issues of concern to the Vatican.
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(Source: AP)