Some 50,000 worshipers gathered at the Vatican in Italy to hear Pope Frances' sixth "Urbi et Orbi" (To the City and the World) message.
The Pope urged unity among people of different faiths, races or ideas.
"Differences should not be seen as a danger but as a source of richness," the Pontiff said.
"The face of God has been revealed in a human face. It did not appear in an angel, but in one man, born in a specific time and place."
He also appealed for peace in conflict zones such as Syria and Yemen, where populations are facing desperate humanitarian crises.
"May the international community work decisively for a political solution that can put aside divisions and partisan interests," he said.
Royal wishes
Queen Elizabeth II, who is also the temporal head of the Church of England, offered customary wishes for peace during her annual Christmas message.
Her message was broadcast to many of the 53 countries in the Commonwealth, including Australia.
The Queen said that at 92-years of age, she hoped she had some wisdom to share in promoting unity and understanding.
"Even with the most deeply held differences, treating the other person with respect and as a fellow human being is always a good first step towards greater understanding."
The Queen and other senior royals later attended a church service at St Mary Magdalene Church.
The Prince of Wales, the Duke of Cambridge, the Duchess of Cambridge, the Duchess of Sussex and the Duke of Sussex arriving to attend the Church service. Source: AAP
Prayers for Indonesia
Christmas services were held in churches in tsunami-hit Indonesia with victims the focus of prayers and donations.
It came as the search continues for survivors of a tsunami along the Sunda Strait, following an eruption and possible landslide on
A representative of the Catholic Kristus Raja Church said the tragic event has "marred the festive season" for Indonesians.
"In this year's Christmas celebrations, we are both happy but yet deeply saddened by the tragedy that befell our brothers and sisters, especially those who live near the coast near the Serang district and Pandeglang," the representative said.
"Some of our church members are also victims of this tragedy."
Tradition in the US
The festive spirit was dampened in the United States when the national Christmas tree went dark on the third day of a U.S government shutdown.
But one festive service not affected was the military's annual Santa Claus "tracker", which sees the
US President Donald Trump and First Lady Melania Trump fielded some of the calls from the children, anxious to know if their presents would arrive on time.
The tradition began in 1955 when a Colonel rushed to answer the red phone, expecting his commander or president, but found a little girl on the other end asking if he was really Santa and decided to play along.
Unity in a time of division
In Spain, King Felipe VI used his Christmas message to stress the need for avoiding division and confrontation, as the political crisis in Catalonia continues to grow.
Separatist politicians continue to push for Catalonia to break away from the rest of Spain.
"A coexistence that means the overcoming of our biggest problems and injustices can never be done through division and certainly not through confrontation," King Felipe said.
"What is needed is agreement, unity to face challenges and difficulties."
Christians in the minority
In Pakistan, the tiny Christian community celebrated Christmas eve by attending a midnight mass in Karachi.
Christians make up about two per cent of Pakistan's majority Muslim population of 208 million.
Christian priest Riaz Masih used his message at the Central Brooks Memorial church to urge for peace in the country.
"We want peace in Pakistan so that the people can feel safe and secure."
There was no specific security threat this year, but churches have been attacked in past years in Pakistan.
Christians make their way to a church to attend a Christmas Mass under tight security in Lahore, Pakistan Source: AAP
Nine people were killed in 2017 when attackers broke into a church in the southwestern city of Quetta just a week ahead of Christmas.
Priest Masih declared his satisfaction for the way worshipers were being frisked as they entered churches.
"We had been provided with fool-proof security last year and it is the same this year," he said.
"We hope God will do good to us. You might have seen all the police and military presence outside. So, there is no security problem but yet we pray to God to avert any untoward incident."
Iraqi Catholic Christians attend a Christmas morning mass at the Mar Behnam church in northern Iraq Source: AAP
Iraqi Christians also celebrated Christmas amid improved security, more than a year after the country declared victory over Islamic State militants.
Militants seized vast swaths of territory in north and west of Iraq in June 2014. Faced with a choice to convert, pay a tax or die, many Christians in northern Mosul, chose to flee. Some sought refuge in nearby towns and cities, but many sought permanent asylum abroad.
U.S-backed Iraqi forces recaptured the areas and declared final victory against ISIS in 2017.
Iraq's Christian population has shrunk from 1.5 million to about 400,000 since the U.S.-led invasion in 2003.
