The leader of the Church appeared visibly moved as he told the gathering in his first public appearance that he was confident the announcement would not cause harm.
It came as the Vatican announced a conclave to elect his successor would start between March 15 and 20, in keeping with Church rules about the timing of such gatherings after the papal see becomes vacant.
In unscripted remarks, the Pope said: "Continue to pray for me, for the Church and for the future Pope."
Officials are still so stunned by the move that Vatican experts have yet to decide what his title will be and whether he will continue to wear the white of a Pope, the red of a cardinal or the black of an ordinary priest.
The 85-year-old, who will step down on February 28, sounded strong at the audience but his eyes appeared to be watering as he reacted to the thunderous applause in the Vatican's vast, modern audience hall, packed with more than 8000 people.
In brief remarks in Italian that mirrored those he read in Latin to stunned cardinals on Monday he appeared to try to calm Catholics' fears of the unknown.
His message was that God would continue to guide the Church.
He said: "I took this decision in full freedom for the good of the Church after praying for a long time and examining my conscience before God."
He said he was "well aware of the gravity of such an act," but also aware he no longer had the strength required to run the 1.2 billion member Roman Catholic Church, which has been beset by a string of scandals.
Benedict said he was sustained by the "certainty that the Church belongs to Christ, who will never stop guiding it and caring for it" and suggested the faithful should also feel comforted by this.
He said he had "felt almost physically" the affection and kindness he had received since he announced the decision.
When Benedict resigned on Monday, the Vatican spokesman said the pontiff did not fear schism in the Church after his decision to step down.
Some 115 cardinals under the age of 80 will be eligible to enter a secret conclave to elect his successor.