Taking the name Pope Benedict XVI, the 78-year-old German appeared on the balcony of St Peter’s Basilica.
His arrival was greeted by loud cheers from the many thousands of pilgrims who had packed St Peter’s Square as news of his election spread across Rome.
He was chosen on the third round of votes by the 115 cardinals meeting to select Pope John Paul II’s successor.
The name Benedict comes from the Latin for “blessing” and the last Pope bearing the name, Benedict XV, reigned during World War I.
Giving a short address in Italian to the crowds gathered below the new Pope paid homage to his predecessor, and great friend, Pope John Paul II.
“Dear brothers and sisters after the great Pope, John Paul II, the cardinals have elected me, a simple and humble worker in the Lord’s vineyard,” he said.
“The fact that the Lord can work and act even with insufficient means consoles me, and above all I entrust myself to your prayers.
“In the joy of the resurrected Lord, we go on with His help. He is going to help us and Mary will be on our side. Thank you,” he added.
Clad in white papal vestments and a short red cape, he then delivered the traditional “Urbi et Orbi” [to the City and the World] blessing to the city of Rome and the world.
Vatican spokesman Joaquin Navarro-Valls said Pope Benedict XVI would dine with Roman Catholic cardinals later on Tuesday and celebrate a Mass with them in the Sistine Chapel on Wednesday morning at 0900 (0700 GMT).
He will be inaugurated as the 265th pope on Sunday, the Vatican has announced.
The new Pope had been one of the front runners in the papal election, which began on Monday when the 115 voting cardinals were sequestered in the Sistine Chapel for their secret conclave.
Pope Benedict XVI, who is the oldest pope for more than a century, was born in 1927 into a traditional farming family in Bavaria, Germany, although his father was a policeman.
The future pope’s studies at seminary were interrupted by World War II and his supporters say that his experiences under the Nazi regime convinced him that the Church had to stand up for truth and freedom.
He is the first German Pope since the 11th Century.
The BBC’s Ray Furlong in Berlin says Cardinal Ratzinger’s election as Pope will generate amazement and enthusiasm in Germany as well as concern among those who had hoped for a more liberal pontiff.
A close friend and confidante of Pope John Paul II, Pope Benedict XVI is also known as a fellow conservative.
For more than 20 years he was head of the congregation of the Doctrine of the Faith in the Vatican – the Vatican’s guardian of orthodoxy.
The BBC’s William Horsley in Rome says his papacy is sure to continue John Paul II’s strongly traditional interpretation of the Catholic faith, including opposition to abortion, homosexuality, priestly marriage and women priests.
Our correspondent says that the homily he made at the Mass before the start of the Conclave in which he denounced all deviations from traditional church teachings as trickery and error, may have been decisive in winning him the title of Pope.
Courtesy BBC News
In context
Pope Benedict XVI is the eighth German pontiff and was the clear favourite to fill the role.
He was one of Pope John Paul II’s closest friends and, like his predecessor, firmly opposes to birth control, supports the celibacy of the priesthood, and is against the ordination of women.
He has also spoken out against homosexuality and once denounced rock music as “the vehicle of anti-religion”.
Benedict XVI was succeeded by Pope Francis on 13 March 2013, and he moved into the newly renovated monastery Mater Ecclesiae for his retirement on 2 May 2013.
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