Pope Benedict, speaking before a larger than usual crowd from his balcony in St Peter’s Square in Rome, asked the faithful to pray for him and for the next Pope.
The crowd chanted "Long live the Pope", waved banners and broke into sustained applause as he spoke from his window.
The 85-year-old Pontiff, who will resign on 28 February, thanked the crowd in several languages.
The Vatican estimated the crowd at more than 50,000 people, larger than the size that turns out at a normal Sunday address not linked to a specific liturgical feast.
Speaking in Spanish, he said: "I beg you to continue praying for me and for the next Pope."
It was not clear why the Pope chose Spanish to make the only specific reference to his upcoming resignation.
A number of cardinals have said they would be open to the possibility of a Pope from the developing world, be it Latin America, Africa or Asia.
After his address, the Pope retired into the Vatican for a scheduled, week-long spiritual retreat and will not make any public appearances until next Sunday.
Speaking in Italian earlier, the pope spoke of the difficulty of making important decisions.
"In decisive moments of life, or, on closer inspection, at every moment in life, we are at a crossroads: do we want to follow the 'I' or God? The individual interest or the real good, that which is really good?" he said.
Since his shock announcement last Monday, the Pope has said several times that he made his decision to become the first Pope in more than six centuries to resign "for the good of the church".
The Pope said his physical and spiritual forces are no longer strong enough to sustain him in the job of leading the world's some 1.2 billion Catholics at a time of difficulties for the church in a fast-changing world.