"I pay homage to the women of Paraguay, who were able to rebuild a country destroyed by an unequal war," he said.
Most of Paraguay's male population died in a devastating war against Brazil, Argentina and Uruguay between 1865 and 1870.
"God protect Paraguayan women, the most glorious of the Americas," he said.
Hundreds of thousands of people went for the Mass at the Shrine of Caacupe, some 50 Km (30 miles) from the capital Asuncion.
Many of them came from neighbouring Argentina and waved the blue-and-white flags of Pope Francis's native country.
"Argentina is his homeland. He is not coming home yet, so we brought it to him," Carmen Mesa, 56, told the Associated Press (AP) news agency.
Pope Francis said the visit to Caacupe would be an emotional occasion to him.
Before becoming a Pope, he travelled many times to the city, known as the spiritual capital of Paraguay.
"I feel at home, here. I came here many times to renew my wishes of living according to the Gospel," he said during Mass.
The Pope's religious order, the Jesuits, evangelised the region in the 1600s.
Pope Francis said the Lord's Prayer in Guarani, the indigenous language spoken by most of the population.
Guarani is an official language along with Spanish in Paraguay.
"I would like to remind you that we are all brothers and sisters," Pope Francis said.
Paraguay is the last stop on the Pope's eight-day tour of South America, which also took him to Ecuador and Bolivia.
The Vatican said the Pope had chosen some of the poorer countries of the region for his visit to reflected his interest in the "peripheries".
Pope Francis is the first leader of the Roman Catholic Church to come from South America.
"Progress and development must ensure a better future for all," Pope Francis said in a speech on the Quito airport runway on Monday after he was welcomed by Ecuadorean President Rafael Correa.
Pope Francis has paid a tribute to Paraguay's women and mothers during Mass celebrated at the country's main pilgrimage site, Caacupe,