"On earth, there is no room for God if there is no room for the human person. To refuse one is to refuse the other," the pontiff said at a packed St Peter's Basilica, referring to the words of the late pope Benedict XVI.
Christmas "is a feast of hope ... making us messengers of peace," he said, adding that human dignity is infinite, even if a "distorted economy" tempts people to be treated like merchandise.
Thousands braved heavy rain on Christmas Eve in St Peter's Square to watch the service on screens outside. Before the Mass, the pope greeted worshippers, thanked them for attending despite the weather and blessed those waiting under umbrellas.
In his homily, Pope Leo XIV also remembered his predecessor, the late pope Francis, who opened the Holy Year at Christmas 2024 while in poor health, calling for hope.
The first US-born pope appealed for peace in all global conflicts, singling out the war in Ukraine and lamenting Russia's refusal of a Christmas truce. He also expressed hope for progress in Israeli-Palestinian peace talks.
On Tuesday, the pope urged "people of goodwill" to implement a 24-hour ceasefire in all wars around the world over Christmas and said Russia's rejection of a brief truce had caused him "great sadness."
On Christmas Day, the pope will deliver the traditional Christmas message in St Peter's Square.
The spiritual leader of about 1.4 billion Catholics will impart the "Urbi et Orbi" ("To the City and the World") blessing, with tens of thousands of worshippers expected to attend.
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