The Pope appealed to Catholics and Lutherans to "mend" history and look with honesty at the past, "recognising error and seeking forgiveness".
By tradition, on 31 October 1517 the German theologian Martin Luther nailed his 95 theses to the door of a church.
The papal visit kicks off a year of events to mark the quincentenary.
Pope Francis and Lutheran leaders presided over an ecumenical prayer service in Lund cathedral in southern Sweden on Monday.
The leader of the Roman Catholic Church praised the Reformation for helping to give greater centrality to scripture in the church's life.
Luther's pamphlet attacked excesses and abuses within the church, and his actions and writings were hugely significant in the schism which developed in Western Christianity, which became known as the Reformation.
Luther was subsequently excommunicated, but his teachings spread throughout northern Europe.
Decades of religious wars in Europe followed.
The Church of Sweden is part of the Lutheran branch of Protestantism, though the country is largely secular.
In a joint statement, the Roman Catholic Church and the Lutheran World Federation said that both partners "are no longer strangers" and that their joint goal was to bring members of the two churches together at the Eucharistic table.
Pope Francis has previously praised Luther for his fight against corruption and greed in the church of the time.
He has also criticised his own church, calling on it to shun greed.
Pope Francis has taken part in events to commemorate the anniversary of the Protestant Reformation during his trip to Sweden.