He presided over an Ash Wednesday ceremony marking the start of the Roman Catholic Church's season of Lent.
It came two days after the surprise announcement that the 85-year-old was to retire at the end of the month.
In his homily, he implicitly criticised recent infighting among clerics inside the Vatican.
He said the face of the Church had been marred by divisions and rivalry among the clergy, reports the BBC's David Willey, who was at the service.
Looking tired, the pontiff anointed the foreheads of the faithful with ashes in a service attended by cardinals, bishops, monks, friars and pilgrims.
What happens next
17-23 February - Lenten retreat, most normal Vatican functions suspended
24 February - Pope recites Angelus for the last time
27 February - Last weekly audience, in St Peter's Square
Evening of 28 February - Pope leaves office
From 15 March - Conclave to elect new Pope
The season of Lent is marked by fasting and acts of penitence for past sins, with worshippers marking a cross on their foreheads with wood ash to symbolise human mortality.
It is the most solemn season in the Church calendar that ends with Holy Week and Easter Sunday.
Earlier in the day, the Pope held his last but one general audience inside the Vatican, his first public appearance since he stunned the Church and wider world by saying he would retire at the end of the month.
He said he had made his decision only after long reflection.
"I am conscious of the gravity of my action," he said, receiving a standing ovation from 8,000 pilgrims from around the world gathered in the Vatican's main audience hall.
"Thank you for the love and prayer with which you have accompanied me... Keep praying for me, for the Church and for the future pope," he said.
Next week the Pope will carry out no public engagements. He will enter a spiritual retreat and pray inside the Vatican.
The pontiff had originally been scheduled to celebrate Ash Wednesday at the small Sant' Anselmo church, then lead a procession to Santa Sabina Basilica on Rome's Aventine Hill.
But the Mass was relocated to St Peter's to accommodate the crowds, the Vatican said. The change also saved the Pope the effort of the procession.Battle for succession
The pontiff will continue with his usual agenda until the day he officially retires at the end of February, Vatican officials say.
By the end of Lent, in six weeks' time, there is expected to be a new pope.
Pope Benedict XVI
At 78, one of the oldest new popes in history when elected in 2005
Born in Germany in 1927, joined Hitler Youth during WWII and was conscripted as an anti-aircraft gunner - but deserted
As Cardinal Joseph Ratzinger, spent 24 years in charge of Congregation for the Doctrine of the Faith - overseeing Catholic doctrine
A theological conservative with uncompromising views on homosexuality and women priests
Reached out to other faiths, visiting sites holy to Muslims and Jews
Our correspondent says Pope Benedict is anxious to ensure a smooth transition of power to his successor, and does not want to go down in history as a pope who abandoned his ministry without sufficient cause.
The pontiff's daily diary until his departure from the Vatican at the end of the month is already full.
The Vatican holds a Lenten retreat from 17 to 23 February. The Pope will hold one more Wednesday audience on 27 February, again in St Peter's Square.
On 28 February he will fly off to the papal retreat at Castel Gandolfo, where he will stay while Church leaders go through the complicated ritual of choosing a successor.
The secret process of selecting a new pope is known as a Conclave, governed by rules which have evolved over centuries.
Our correspondent says the behind-the-scenes battle for the succession has already begun.
At 78, Cardinal Joseph Ratzinger was one of the oldest popes in history at his election.
He took the helm as one of the fiercest storms the Catholic Church has faced in decades - the scandal of child sex abuse by priests - was breaking.
The pontiff said in his resignation statement on Monday: "After having repeatedly examined my conscience before God, I have come to the certainty that my strengths, due to an advanced age, are no longer suited to an adequate exercise of the Petrine ministry."
