The 85-year-old met cardinals before being formally bid farewell by Cardinal Tarcisio Bertone and other members of the Vatican's Secretariat of State in Rome.
He has been flown by helicopter to Castel Gandolfo, the pope's summer retreat, with the empty office of pope - or Sede Vacante - formally declared at 7pm local time.
As he bid the Vatican farewell a message of thanks to his followers appeared on his Twitter account.
It is expected he will spend the first two months of his retirement at the retreat, before he moves away from public life.
It was revealed that he is "grateful" for the prayers of British Catholics following the announcement that he is to step down.
A message from the Vatican addressed to the Archbishop of Westminster, the Most Rev Vincent Nichols, said the pope continued to give thanks for the "many graces" he received during his four-day visit to Scotland and England in September 2010.
It added that Pope Benedict would pray for the UK faithful.
"His Holiness promises to pray for all of you and for the people entrusted to your pastoral care, and he willingly imparts his apostolic blessing," the letter stated.
The outgoing pope held his last general audience in St Peter's Square, Rome, on Wednesday in front of a huge crowd.
(Pope Benedict) recalls with gratitude the welcome extended to him on his historic visit to your country in September 2010, and he continues to give thanks to God for the many graces received during those four days
He will now be known as 'Pontiff emeritus' or 'Pope emeritus', and will keep the name of 'His Holiness, Benedict XVI'.
He will dress in a white cassock without the mozzetta (elbow-length cape) and will no longer wear the red papal shoes.
His 'Fisherman's Ring', the special signet ring which is used for impressions to on official documents, will be destroyed with the lead seal of the pontificate.
Pope Benedict was elected in 2005 following the death of John Paul II and led the world's 1.2bn Catholics for almost eight years.
His decision to step aside shocked the world when it was announced earlier this month.
It is believed a successor will be chosen within the next few weeks, after the pope changed the rules of the conclave to allow cardinals to bring forward the start date of the discussions if all of them arrive in Rome before the usual 15-day transition between pontificates.
An estimated 115 cardinals are expected to play a role in electing the new pope, during sessions which will take place in secrecy at the Vatican's Sistine Chapel.
The pope is due to return to Rome in April to live in a convent in the Vatican.