Fr Jacques Hamel, 85, was holding morning Mass at his church in Saint-Étienne-du-Rouvray near Rouen, Normandy, when two 19-year-old men stormed the building before slitting his throat.
Speaking to pilgrims from Rouen at a special service in the Vatican, the pontiff was quoted by Reuters as saying: "He gave his life for us so as not to deny Jesus. He is a martyr and martyrs are beatified."
Beatification is one of the first steps towards canonisation in the Roman Catholic Church.
After the service, which took place in the chapel of a guest house in the Vatican where the pope lives, the Archbishop of Rouen Dominique Leburn told journalists the pope told him Hamel should be "venerated".
Becoming venerated is an honor usually only given once the complex process for sainthood has started.
The pope went on to describe Father Jacques as: "A good, humble man, a man of brotherhood who always sought to make peace, was assassinated as if he were a criminal."
He recently celebrated the canonisation of Mother Theresa (pictured above).