Pope Francis in his Christmas speech at St. Peter's Square said Christmas had been "taken hostage" by materialism, casting God in shadows and being indifferent towards the woes of the marginalised on Sunday.
"If we want to celebrate Christmas authentically, we need to contemplate this sign: the fragile simplicity of a small newborn, the meekness of where he lies, the tender affection of the swaddling clothes. God is there," the Pope said at St. Peter's Basilica.
Some 10,000 people including cardinals and bishops attended the speech.
The Pope said people had to be reminded that the message of Christmas was humility, simplicity and mystery.
"Jesus was born rejected by some and regarded by many others with indifference," he continued.
"Today also the same indifference can exist, when Christmas becomes a feast where the protagonists are ourselves, rather than Jesus; when the lights of commerce cast the light of God into the shadows; when we are concerned for gifts, but cold toward those who are marginalised."
He then added in unscripted remarks: "This worldliness has taken Christmas hostage. It needs to be freed."
Security was tightened in Italy after Italian police killed the man believed to be behind the Berlin Christmas market attack.
Pope Francis also urged people to be compassionate towards children, saying baby Jesus should remind everyone of those suffering today, particularly children.
"Let us also allow ourselves to be challenged by the children of today’s world, who are not lying in a cot caressed with the affection of a mother and father, but rather suffer the squalid mangers that devour dignity: hiding underground to escape bombardment, on the pavements of a large city, at the bottom of a boat over-laden with immigrants," he added.
"Let us allow ourselves to be challenged by the children who are not allowed to be born, by those who cry because no one satiates their hunger, by those who do have not toys in their hands, but rather weapons," he said.
The Pope today will deliver his twice-yearly "Urbi et Orbi" ("To the City and to the World") blessing and message from the central balcony of St. Peter's Basilica.
Thousands of people who could not enter the Church watched the speech on large screens in the chilly night.