"I will no longer be pope but a simple pilgrim who is starting out on the last part of his pilgrimage on this Earth," the pope told thousands of cheering supporters from the balcony of the papal residence at Castel Gandolfo near Rome.
"I am happy to be with you surrounded by the beauty of creation. Thank you for your friendship and affection," said the frail but smiling 85-year-old, dressed in the white papal cassock.
The leader of the world's 1.2 billion Catholics earlier left the Vatican in a white helicopter emblazoned with the Vatican flag, seeing St Peter's Basilica from the sky for the last time as pope.
The bells of St Peter's rang out to mark the historic event as the pope took leave of his closest aides in an emotional ceremony in the Vatican where he was applauded and cheered by priests, nuns and liveried Swiss Guards.
"Thank you for your love and support," the pope said in a final tweet sent from his @pontifex Twitter account just before taking off.
"May you always experience the joy that comes from putting Christ at the centre of your lives."
The Twitter account will now be suspended until a new pope is elected in a conclave next month.
At 1900 GMT, Benedict will no longer be pope.
The Swiss Guards -- a military corps that has protected the papacy since the 15th century and is best known for its brightly-coloured uniforms -- will then leave their posts and return to Rome.
Following tradition, staff in the Vatican will meanwhile apply seals to the doors of the papal apartments and the lift that leads up to them -- to be broken only once a new pope has been elected.
Benedict is only the second pope to resign in the Church's 2,000-year history and in his final hours as pope on Thursday he took the unprecedented step of pledging allegiance to his successor.
"Among you there is also the future pope to whom I promise my unconditional obedience and reverence," the pope said earlier on Thursday in final remarks to cardinals in an ornate Vatican hall.
"Let the Lord reveal the one he has chosen," said the pope, wearing an ermine-lined red stole over his white cassock as cardinals doffed their berettas and lined up to kiss the papal ring.
Benedict will remove the personalised signet ring -- known as the "Fisherman's Ring" -- before he leaves office and it will be destroyed, a tradition to ensure the papal seal is not misused.
"We have experienced, with faith, beautiful moments of radiant light together, as well as times with a few clouds in the sky," Benedict told the cardinals, reprising his remarks to a crowd of 150,000 faithful in St Peter's Square on Wednesday.
"Let us remain united, dear brothers," he said, in the final moments of an eight-year pontificate often overshadowed by infighting at the Vatican and divisions between reformers and traditionalists in the Catholic Church.
The Vatican has said pope will live in Castel Gandolfo for the next two months before taking up permanent residence inside a former convent on a hilltop in the Vatican grounds overlooking Rome.
The German pope stunned the globe when he announced on February 11 his decision to step down, saying he no longer had the "strength of mind and body" required by a fast-changing world.
The news has captured massive media attention, with the Vatican saying that 3,641 journalists from 61 countries will cover the upcoming conclave -- on top of the regular Vatican press corps.
The ex-pontiff will formally carry the new title of "Roman Pontiff Emeritus" or "pope emeritus" for short, although he will still be addressed as "Your Holiness Benedict XVI".
The Vatican has said he can still wear the white papal cassock but without the doubled shoulder cape.
The only other pope who resigned by choice was Celestine V, a humble hermit who stepped down in 1294 after just a few months in office out of disgust with Vatican corruption and intrigue.
Once Benedict takes up residence inside the Vatican, the Church will be in the unprecedented situation of having a pope and his predecessor living within a stone's throw of each other.
Commenting on the new arrangement, Vatican spokesman Federico Lombardi said that Benedict "has no intention of interfering in the positions, decisions or activities of his successor".
Benedict has said he will live "hidden from the world" but the Vatican indicated he could provide "spiritual guidance" to the next pope.
Vatican analysts have suggested his sudden exit could set a precedent for ageing popes in the future, and many ordinary Catholics say a more youthful, pastoral figure could breathe new life into a Church struggling on many levels.
From Catholic reformers calling for women clergy and for an end to priestly celibacy, to growing secularism in the West and ongoing scandals over sexual abuses by paedophile priests going back decades, the next pope will have a tough agenda.
"It's a very emotional day," said Patrizia Gasperini, 40, who works in a gift shop next to the imposing wooden doors of Castel Gandolfo that Swiss Guards will shut at 1900 GMT to signal the end of Benedict's papacy.
Gasperini, who named her eight-year-old daughter Benedetta in his honour, said: "We've been privileged to see a different, more humane side to him over the years, and grown to love him."
What the stars mean:
★ Poor ★ ★ Promising ★★★ Good ★★★★ Very good ★★★★★ Exceptional