The Pope said the residential schools, part of a Government policy to destroy indigenous culture, was a “disastrous error” that was incompatible with the Gospel.
Speaking in front of school survivors and indigenous community members at a former school south of Alberta, Edmonton, the Pontiff said the schools destroyed their culture, tore apart families and marginalised people.
"I am deeply sorry," he said to applause, adding: “I humbly beg forgiveness for the evil committed by so many Christians against the Indigenous peoples.”
Pope Francis said his apology was a first step and that a “serious investigation” was needed into the schools to promote healing.
"Although Christian charity was not absent, and there were many outstanding instances of devotion and care for children, the overall effects of the policies linked to the residential schools were catastrophic," he said.
“What our Christian faith tells us is that this was a disastrous error, incompatible with the Gospel of Jesus Christ."
Survivor Evelyn Korkmaz said: "Part of me is rejoiced, part of me is sad, part of me is numb."
She added that she had hoped to hear a “work plan" from the Pope on what he would do next to reconcile, including releasing church files on children who died at the schools.
More than 150,000 native children in Canada were forced to attend government-funded Christian schools from the 19th century until the 1970s.
Officials have admitted that physical and sexual abuse was rampant at the schools, with students beaten for speaking their native languages.
The discoveries of hundreds of potential burial sites at former schools in the past year drew international attention to the schools. Catholic religious orders operated 66 of the country's 139 residential schools.
The Pontiff travelled to the lands of four Cree nations to pray at a cemetery and deliver the long-sought apology at nearby powwow ceremonial grounds.
Four chiefs escorted the pontiff in a wheelchair to the site near the former Ermineskin Indian Residential School, and presented him with a feathered headdress after he spoke, making him an honorary leader of the community.
Prime Minister Justin Trudeau, who last year apologised for the "incredibly harmful government policy," also attended, along with other officials.
As part of a lawsuit settlement involving the government, churches and approximately 90,000 survivors, Canada has paid reparations that amounted to billions of dollars being transferred to Indigenous communities.