Leading around 150,000 people in prayer, Francis said the fertile green fields and snow-capped mountains of Araucania were both blessed by God and cursed by man, having been the site of "grave human rights violations" during General Augusto Pinochet's 1973-1990 dictatorship.
He said: "We offer this Mass for all those who suffered and died, and for those who daily bear the burden of those many injustices."
Francis also referred to the more recent violence that has flared in southern Araucania as radical Mapuche factions press for the return of their lands, including a recent spate of church burnings that preceded his visit.
No-one has claimed responsibility for the 10 firebombs that have damaged, or in some cases burned churches to the ground, in recent days.
The Argentine Jesuit pope took those factions to task, saying violence was not the answer to their grievances.
"You cannot assert yourselves by destroying others, because this only leads to more violence and division," he admonished in his homily.
"Violence begets violence, destruction increases fragmentation and separation. Violence eventually makes a most just cause into a lie."
At the same time, he demanded that the government not just negotiate "elegant" agreements with the indigenous people, but actually implement them.
The Argentine pope is particularly attuned to indigenous issues and their campaigns for recognition of their land, language, culture and traditions. He hopes to use his week-long trip to Chile and Peru to put the issue on the global agenda and set the stage for a church meeting next year on the Amazon and the people who live there.
The Maquehue Air Base in Temuco where the Mass was held was built on land taken from the Mapuche in the early 20th century.
The base was used as a detention centre during the 1973-1990 dictatorship, during which around 40,000 people were killed, tortured or imprisoned for political reasons.
The government estimates that 3,095 were killed, including about 1,200 who were forcibly disappeared.
History's first Latin American pope knows well the history of the time, since he was a young Jesuit superior next door during Argentina's "Dirty War," during which thousands of suspected leftists were killed, imprisoned or disappeared at the hands of the military junta.
The Mass began with Mapuche natives performing a traditional horn and drum ceremony. Mapuche music, prayers and other traditional elements were used throughout the Mass.
Francis had previously urged Chileans to listen to indigenous people who are "often forgotten, whose rights and culture need to be protected lest that part of this nation's identity and richness be lost".
Hugo Alcaman, the president of the Enama Mapuche group, said: "Saying that we should be respected, that we have a right to exist and be recognised, is all very strong.
"It's Chile that has to respond, especially politicians."
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