Calling the attendance of Shimon Peres and Mahmoud Abbas "a great symbol of brotherhood", Francis addressed the two leaders in Italian after the two-hour Sunday evening service to tell them that "the children are tired and exhausted by the conflicts".
He also called for the "walls of enmity" to be toppled and for all parties to embark on the "road of dialogue and peace so that love and friendship triumph".
The pope said that "peacemaking calls for courage, much more so than warfare".
Peres, 90, who leaves office next month, in his speech after the group prayer ceremony, urged all parties to "fight with all our strength" for peace in the Middle East, although that will require "sacrifices and compromises".
Abbas, speaking after Pope Francis and Peres, said in the name of the Palestinian people that they want "peace for us and for our neighbours" as well as a "dignified life and freedom", and he asked god to provide a "prosperous and promising future for our people in our sovereign and independent state".
Peres and Abbas participated in the ceremony calling for peace in the Israeli-Palestinian conflict after the pontiff during his May 24-26 trip to the Holy Land issued a surprise invitation to them to visit his "house".
During the ceremony, at which the pope was seated between Peres and Abbas, Christian cardinals, Jewish rabbis and Muslim imams read from the New and Old Testaments and from the Koran in the first such inter-religious event ever held in the Vatican.
After the ceremony, the pontiff, Peres and Abbas met privately for about 20 minutes to exchange viewpoints.