Pope Benedict XVI has appealed for just solutions to the conflicts in the Middle East, Iraq, Africa and elsewhere in his annual Christmas message.
He denounced terrorism and violence that victimised children and women.
His address came as millions of Christians around the world celebrated the traditional day of Christ's birth.
In Bethlehem, biblical place of Jesus' birth, more pilgrims visited the town for Christmas than in any year since the Palestinian uprising began in 2000.
'Joy, hope and peace'
The Pope spoke from a balcony in St Peter's Basilica in Rome, overlooking the square where thousands of people had gathered in the winter sunshine.
He said he hoped the "light of Christ" would "shine forth and bring consolation to those who live in the darkness of poverty, injustice and war".
An enthusiastic crowd broke into chanting during pauses in the Pope's address.
In his Urbi et Orbi speech (Latin for 'To the City and the World') he said: "May this Christmas truly be for all people a day of joy, hope and peace."
He urged political leaders to have the "wisdom and courage to seek and find humane, just and lasting solutions" to "ethnic, religious and political tensions... [which are] destroying the internal fabric of many countries and embittering international relations".
The address was broadcast live on television to dozens of countries and was followed by greetings in about 60 languages.
In the Pope's midnight Mass at the basilica, he urged people to find time for God and the needy.
In front of the Basilica, a new floodlit Nativity scene was unveiled.
This year, the larger-than-life-size statues of the baby Jesus and his family have been placed in a Nativity scene set not in a Bethlehem stable but in a room in Joseph's house in Nazareth.
Vatican officials say the change was made to illustrate the notion that Jesus was born everywhere, not just in Bethlehem.
Palestinian Authority President Mahmoud Abbas, a Muslim, joined the midnight Mass in Bethlehem and emphasised that not only Christians were celebrating the festival.
"The new year, God willing, will be a year of security and economic stability," he said.
"We pray next year will be the year of independence for the Palestinian people," he added.
Latin Patriarch Michel Sabbah, the Catholic leader in the Holy Land, called for peace in the Middle East as he led the Mass.
"This land belongs to God. It must not be for some a land of life and for others a land of occupation and a political prison," he said in a sermon delivered in his native Arabic.
Local officials in Bethlehem say double the number of pilgrims have visited this year compared to last.
Fears about security and Israel's West Bank barrier - an eight-metre (24ft) concrete wall separating the town from Jerusalem - have discouraged potential visitors in recent years.
Israel says the barrier is vital to prevent attacks by Palestinian militants.
During the second Palestinian uprising, which started in September 2000, tourism collapsed.
Relative stability for past two years however has led tourists and pilgrims to return to the town in larger numbers.
But the BBC's Bethany Bell says there are still far fewer tourists than there used to be before the uprising and that many of those celebrating outside the Church of the Nativity were local people.