"We declare and define as saints the blessed John XXIII and John Paul II," the Catholic leader said in a Latin prayer, as pilgrims and foreign dignitaries applauded and chanted: "Amen!"
A priest walks past pictures of Pope John Paul II and Pope John XXIII (R) during a mass at the Metropolitan Cathedral, Managua (Reuters Photo)
Pope emeritus Benedict XVI, 87, who is the first pontiff to step down since the Middle Ages, made a rare public appearance in his white papal cassock and Francis embraced him before the ceremony.
Commentators defined the event as a "four-pope day".
Many faithful waved the red-and-white flags from John Paul II's native Poland and one pilgrim held up a banner reading: "Two pope saints in heaven, two in St Peter's Square".
"We are followers of all four popes who have all been close to the people. This is an historic day but one that you really feel inside," said Luisa Tomolo, a member of an Italian religious movement.
Bishops attend the canonisation mass of Popes John XXIII and John Paul II on St Peter's at the Vatican. (AFP Photo)
Thousands also followed the ceremony on giant screens set up in picturesque spots of Rome, witnessing an event seen as a way of uniting conservative and reformist wings of Catholicism.
The ceremony was shown in 3D at hundreds of cinemas across the world from Francis's Argentina to Lebanon and was live tweeted by the Vatican's vicariate of Rome under the hashtag #2popesaints.
Read: Mass gathering: Vatican makes history with two pope saints day
Francis was co-celebrating the mass with Benedict XVI and hundreds of bishops and cardinals -- the first time that two living popes say mass together.
It was also the first time that two Catholic Church leaders were being declared saints on the same day.
The charismatic, globe-trotting John Paul II helped topple Communism in Eastern Europe and John XXIII is best remembered for launching a process of reform of the Catholic Church in the 1960s.
Faithful fill St. Peter's Square at the Vatican made even more historic by the presence of retired Pope Benedict XVI. (AP Photo)
Former German chancellor Helmut Kohl paid tribute to John Paul II in an editorial for Il Messaggero.
"He played a decisive role in making the fall of the Berlin Wall possible," Kohl said, adding that the pope had been "a fearless fighter for freedom".
Francis has reached levels of popularity not seen since the days of John Paul II but experts say he is more comparable to John XXIII -- a unifying figure with the kindly manner of a parish priest.
By sainting them together, Francis "is speaking not just to the outside world but to rival camps within the Catholic fold who see John XXIII and John Paul II as their heroes", said US-based Vatican expert John Allen from the Boston Globe.
The Vatican said 98 foreign delegations were present including former Polish president and Solidarity leader Lech Walesa -- an ally of John Paul II -- and the kings of Belgium and Spain.
Zimbabwean President Robert Mugabe also attended -- despite a ban from entering the European Union, which does not apply in the Vatican City, the smallest sovereign state in the world.
Pope Francis swings incense as he celebrates mass during the canonisation ceremony in St Peter's Square, Vatican. (Reuters Photo)
Ukrainian Prime Minister Arseniy Yatsenyuk had been due to come but was forced to cut short his trip after meeting with Pope Francis on Saturday because of the spiralling tensions in his country.
Among the attendees was also Floribeth Mora, the Costa Rican woman whose healing from a brain aneurysm has been declared the second miracle in John Paul II's name required for sainthood status.
She carried a reliquary containing John Paul II's blood onto the altar. A piece of John XXIII's skin was also brought to the ceremony as a relic.
There were 10,000 police on patrol along with 3,500 official volunteers on hand, including 25 Polish cultural guides and 20 psychiatrists trained in dealing with panic attacks.
A Vatican smartphone app entitled Santo Subito! (Sainthood Now) -- the phrase chanted by the crowd at John Paul II's funeral -- provided practical tips for pilgrims and quotes from the two pontiffs.
The Polish pope (1978-2005) became a media superstar and survived an assassination attempt by Turkish extremist Mehmet Ali Agca in 1981.
He was known as the "Pilgrim Pope" and was the first to pray in a synagogue, to enter a mosque in an Islamic country and to preside a meeting of leaders of all the world's main religions.
But he drew sharp criticism for his clampdown on leftist movements in the Church and his failure to tackle child sex crimes by priests which became a wave of scandals at the end of his pontificate.
The acceleration of his sainthood, which has been the fastest since the 18th century when the current rules were adopted, has been controversial.
Francis also sped up John XXIII's sainthood cause, granting it with only one supposed miracle to his name instead of the two usually required.