Pope Francis in his traditional Christmas address called for peace in Jerusalem and highlighted the plight of children scarred by conflict, having earlier urged the world's Catholics not to ignore the plight of migrants.
Tens of thousands of worshippers gathered at the Vatican to hear the pontiff's fifth "Urbi et Orbi" (To the City and The World) message.
It was delivered hours after a Christmas Eve mass where he led on how migrants had been "driven from their land" because of leaders willing to shed "innocent blood".
On Monday, Francis's message sought "peace for Jerusalem and for all the Holy Land".
"We see Jesus in the children of the Middle East who continue to suffer because of growing tensions between Israelis and Palestinians," he said.
"Let us pray that the will to resume dialogue may prevail between the parties and that a negotiated solution can finally be reached, one that would allow the peaceful coexistence of two states within mutually agreed and internationally recognised borders."
The pontiff's plea came as fresh tensions simmered in the West Bank following President Donald Trump's recognition of Jerusalem as Israel's capital.
Following Trump's declaration, Guatemala's President Jimmy Morales said Sunday his country would move its embassy from Tel Aviv to Jerusalem.
Mr Trump's announcement on December 6 was followed by demonstrations and clashes, including in Bethlehem in the West Bank where Christians marked the birth of Jesus at a midnight mass.
"May the Lord also sustain the efforts of all those in the international community inspired by good will to help that afflicted land to find, despite grave obstacles the harmony, justice and security that it has long awaited," the pope said.
The pontiff also mentioned other global flashpoints such as Syria, Iraq, Yemen, South Sudan and Venezuela, after stressing that the "winds of war are blowing in our world".
"Let us pray that confrontation may be overcome on the Korean peninsula and that mutual trust may increase in the interest of the world as a whole," the 81-year-old said.
Fewer tourists in Bethlehem
Earlier, celebrating midnight mass in the ancient town, Archbishop Pierbattista Pizzaballa, apostolic administrator of the Latin Patriarch of Jerusalem, used his homily to lambast the wars that "the Herods of today fight every day to become greater, to occupy more space".
Criticising Mr Trump's announcement, Archbishop Pizzaballa insisted "Jerusalem is a city of peace, there is not peace if someone is excluded. Jerusalem should include, not exclude", stressing the principle that the city is for both peoples and the three Abrahamic faiths.
Hundreds had gathered in the cold on Bethlehem's Manger Square to watch the annual scout parade towards the Church of the Nativity, built over the spot where tradition says Mary gave birth to Jesus.
But the square was noticeably quieter following recent violence between Palestinian protesters and the Israeli army.
Twelve Palestinians have been killed since Mr Trump's declaration, including a 19-year-old who died of his wounds on Sunday nine days after he was shot during a Gaza protest.
Israel seized east Jerusalem in the 1967 Middle East war and later annexed it, in moves never recognised by the international community.
Palestinians view east Jerusalem as the capital of their future state and interpreted Mr Trump's statement as rejecting their right to a capital in east Jerusalem, although the Americans deny this.
First Xmas in Homs in years
Christmas decorations have meanwhile become more visible in Christian areas of Syria's capital Damascus this year.
In the central Syrian city of Homs, Christians will celebrate Christmas with great fanfare for the first time in years after the end of battles between regime and rebel forces - with processions, shows for children and even decorations among the ruins.
In Iraq too, this year marks a positive turning point for the Christian community in the northern city of Mosul.
Britain's Queen Elizabeth II meanwhile paid tribute to the cities of London and Manchester which this year suffered what she called "appalling" terror attacks.
"This Christmas, I think of London and Manchester, whose powerful identities shone through over the past 12 months," the 91-year-old monarch said in the pre-recorded televised message.
Elsewhere, a tragic Christmas weekend in the Philippines was compounded Monday by the deaths of 20 people in a bus collision while travelling to mass.