Pope calls for end to row over Iran nuclear issue
"May an honorable solution be found for all parties, through honest and serious negotiations," he said.
He also affirmed Israel's "just right to exist in peace" while calling on the international community to help the Palestinians move towards statehood.
It is the pontiff's first Easter as Pope since the death of John Paul II.
His Easter message - "Urbi et Orbi" - was broadcast live on television to more than 50 countries, while about 100,000 people gathered in the square.
Speaking on Iraq, the Pope called for peace to "finally prevail over the tragic violence that continues mercilessly to claim victims".
He also prayed that those "caught up in the conflict in the Holy Land may find peace, and I invite all to patient and persevering dialogue, so as to remove both ancient and new obstacles".
he said it was also important for the Palestinian people to have a "state that is truly their own".
The pontiff also prayed that leaders and international organizations would strengthen their will to "achieve peaceful co-existence among different races, cultures and religions".
Addressing the humanitarian crisis in Sudan's Darfur region, the Pope prayed for the spirit of Christ to bring relief to people who were "living in a dramatic humanitarian situation that is no longer sustainable".
Better living conditions were also needed for millions on people in Latin America, he said.
Cheers went up among the crowd when the Pope prayed for "harmony" in Italy, an allusion to disputes over the outcome of the recent general election.
Prime Minister Silvio Berlusconi has refused to concede defeat to opposition leader Romano Prodi, who was declared the provisional winner on Tuesday.
The pope prayed Italian leaders would be strengthened in a "keen desire to reach the objectives of harmony and authentic development, for the good of all".