Benedict has said he decided to retire after realizing that, at 85, he simply didn't have the "strength of mind or body'' to carry on.
"I have taken this step with the full understanding of the seriousness and also novelty of the decision, but with a profound serenity in my soul,'' Benedict told the crowd.
He will meet this morning with cardinals for a final time, then fly by helicopter to the papal residence at Castel Gandolfo south of Rome.
There, at 8 p.m., the doors of the palazzo will close and the Swiss Guards in attendance will go off duty, their service protecting the head of the Catholic Church over -- for now.
Many of the cardinals who will choose Benedict's successor were in St. Peter's Square for his final audience. Those included retired Los Angeles Cardinal Roger Mahony, the object of a grass-roots campaign in the U.S. to persuade him to recuse himself for having covered up for sexually abusive priests. Mahony has said he will be among the 115 cardinals voting for the next pope.
"God bless you,'' Mahony said when asked by television crews about the campaign.
Also in attendance Wednesday were cardinals over 80, who can't participate in the conclave but will participate in meetings next week to discuss the problems facing the church and the qualities needed in a new pope.
"I am joining the entire church in praying that the cardinal electors will have the help of the Holy Spirit,'' Spanish Cardinal Julian Herranz, 82, said.
Herranz has been authorized by the pope to brief voting-age cardinals on his investigation into the leaks of papal documents that exposed corruption in the Vatican administration.
Vatican officials say cardinals will begin meeting Monday to decide when to set the date for the conclave.
But the rank-and-file faithful in the crowd weren't so concerned with the future; they wanted to savor the final moments with the pope they have known for years.
"I came to thank him for the testimony that he has given the church,'' said Maria Cristina Chiarini, a 52-year-old homemaker who traveled by train from Lugo in central Italy with about 60 members of her parish. "There's nostalgia, human nostalgia, but also comfort, because as Christians we have hope. The Lord won't leave us without a guide.''