The Pope urged the faithful to follow the example of the new saint, the 18th century Friar Antonio Galvao, in helping the poor and needy in a world he said was "so full of hedonism".
Catholics came from across Brazil and other Latin America countries for the open-air mass, many camping out overnight in chilly weather on the Campo de Marte military airfield on the edge of Sao Paulo.
Pope Benedict's canonization of Friar Galvao was an important part of his mission on this trip to revitalize the Church in Latin America, home to nearly half the world's 1.1 billion Catholics.
Frei Galvao is considered a guardian of women in labor and the Vatican has attributed two miracles to him -- the curing of a 4-year-old girl who was believed to have an incurable disease and the survival of a mother and child in a high-risk birth.
"He was renowned as a counselor, he was a bringer of peace to souls and families, and a dispenser of charity especially toward the poor and the sick," the Pope said in his homily.
"The world needs transparent lives, clear souls, pure minds that refuse to be perceived as mere objects of pleasure," he said.
He also criticized the media business, saying: "It is necessary to oppose those elements of the media that ridicule the sanctity of marriage and virginity before marriage."
"Can men and women of this world find peace if they don't integrate into their conscience the necessity to reconcile with God, with the neighbor, and with their own self?" the Pope asked. "It is only united in communion with the Lord through the Eucharist and reconciled with God and our neighbour that we will be bearers of this peace the world cannot give," Pope Benedict added.
Police estimated the crowd numbered 1 million people but reporters said it looked to be smaller. However, Pope Benedict appeared to be winning some hearts and minds.
The Pope will meet Brazilian bishops in Sao Paulo's Se Cathedral later on Friday and then travel to the holy shrine city of Aparecida, where he will deliver the opening address to a conference of Latin American and Caribbean bishops.
.- Today, before more than a million faithfull gathered at the Campo de Marte in Sao Paulo, Pope Benedict canonized Brazil's first native-born saint before hundreds of thousands of flag-waving followers in the world's largest Roman Catholic nation. Pope Benedict made reminded the necessity for reconciliation with God and among men, calling for clean lives and clear souls.