In her traditional Christmas message, broadcast from Sandringham, Her Majesty hailed President Nelson Mandela of South Africa as an example of "how to accept the facts of the past without bitterness".
"His example is a continuing inspiration to the whole Commonwealth and to all those everywhere who work for peace and reconciliation," she said.
The address came at the end of another troubled year for the royals, as the Queen headed a family gathering minus her sons' ex-wives and warned against recriminations over personal or political problems.
"Each year brings its share of difficulties for many families," the Queen noted. "This year has, I know, been no exception. And during it some have suffered bereavement of a tragic and shocking kind," she added, in an apparent reference to the Dunblane massacre in March.
The Queen appeared to skirt around controversy sparked by Prince Philip last week, when he said British laws banning most handguns, introduced since the massacre, were an over-reaction and guns were no more dangerous than cricket bats.
"At such times, it is tempting for all of us, especially those who suffer, to look back and say `If only'," she said. "But to look back in that way is to look down a blind alley." In his Christmas Day sermon at Canterbury Cathedral, Dr George Carey, urged people to face up to their spiritual needs as well as material ones.
"In our society, that feels at times so adrift from its moral, historical and institutional roots, I detect an increasing desire in people to find a spiritual home," he said.
"We have seen it expressed this year, in the response to the killings at Dunblane and to the murder of Philip Lawrence [the headmaster stabbed while trying to protect a pupil]. It has been there too in the debates on morality and the call for our millennium celebrations to be something much more than a trade fair or a street party."
He urged the congregation to embark on a "spiritual journey towards God" to find the fulfilment they were looking for.
In Rome, Pope John Paul wished the world a happy Christmas in 55 languages but said the spirit of the Nativity was marred by tension in the Holy Land and international indifference to the tragedy in Africa.
In his Urbi et Orbi (to the city and the world) blessing and message, the 76-year-old Pontiff said Christmas meant not being resigned to violence and injustice but to strive to overcome hatred and rancour and return to dialogue.
The pontiff, who this year did not celebrate a Christmas Day Mass for health reasons, spoke to thousands of people gathered under dark skies in a rainy St Peter's Square.
"The echo of the songs of Christmas must travel much farther," he said. "It must resound beyond walls where the clash of arms is still heard, shattering the spell of peace brought by this holy day."
The Pope, celebrating his 19th Christmas season as leader of the world's 960 million Roman Catholics, said that while the past year had brought peace to Bosnia, Guatemala and elsewhere, it was elusive in many other places.
The pontiff, who has suffered from a series of health problems, celebrated a solemn midnight Mass in St Peter's Basilica, 12 hours before his address.But, heeding medical advice to conserve his strength, he skipped the Christmas Day Mass in the basilica.