Organisers predicted nearly half a million people would attend his open-air mass, but only 150,000 showed up for the service, his last public appearance in Brazil.
Benedict blamed Marxism and unbridled capitalism for Latin America's problems on Sunday, and urged bishops to mould a new generation of Catholic leaders in politics to reverse the church's declining influence in the region.
Ending a five-day trip to the world's largest Roman Catholic country, the pontiff assailed capitalism's negative effects and Marxist influences that have motivated some grass-roots Catholic activists, remnants of the Liberation theology he moved to crush when he was a cardinal.
Marxism and capitalism
"The Marxist system, where it found its way into government, not only left a sad heritage of economic and ecological destruction, but also a painful destruction of the human spirit," he said as he opened a two-week bishops' conference aimed at re-energising the church's influence in Latin America.
But he added that unfettered capitalism and globalisation, blamed by many in the region for the deep divide between the rich and poor, gives "rise to a worrying degradation of personal dignity through drugs, alcohol and deceptive illusions of happiness".
Benedict, speaking in Spanish and Portuguese to the bishops, said Latin America needed more dedicated Catholics in leadership positions in the media and at universities.
"This being a continent of baptised Christians, it is time to overcome the notable absence - in the political sphere, in the world of the media and in the universities - of the voices and initiatives of Catholic leaders with strong personalities and generous dedication, who are coherent in their ethical and religious convictions," he said.
However, he told priests to stay out of politics as they fought for social justice, rebuffing proponents of liberation theology who advocate seeking justice on earth through activism and not just being heavenly minded.
The pontiff said the church's leaders must halt a trend that has seen millions of Catholics turn to evangelical Protestant churches or stop going altogether.
"It is true that one can detect a certain weakening of Christian life in society overall, and of participation in the life of the Catholic Church, due to secularism, hedonism, indifferentism and proselytism by numerous sects, animist religions and new pseudo-religious phenomena."
The 80-year-old pope also said the Church needs to worker harder getting its message across on the internet, radio and television - methods used effectively in Brazil by Protestant congregations attracting legions of followers, particularly in the vast slums ringing the nation's cities.
While Brazil is home to more than 120 million of the world's 1.1 billion Catholics, the nation's census shows the percentage of citizens calling themselves Catholics plunged to 74 per cent in 2000 from 89 per cent in 1980.
The ranks of those calling themselves evangelical Christians rose from 7 per cent to 15 per cent.