The Most Rev Justin Welby told worshippers at Canterbury Cathedral that much could be learnt from the Nativity story, where Jesus is "power seen in humility".
Preaching at the Sung Eucharist service, he made what will be interpreted by some as a jibe at US President Donald Trump by contrasting the son of God with "populist leaders that deceive" their people.
And in an echo of Pope Francis's address at Christmas Eve Mass in the Vatican, the Archbishop drew a parallel between the journey of Mary and Joseph to Bethlehem and the refugee crisis.
He told the congregation: "The nature of those who have power is to seek to hold on to it.
"In 2017 we have seen around the world tyrannical leaders that enslave their peoples, populist leaders that deceive them, corrupt leaders that rob them, even simply democratic, well-intentioned leaders of many parties and countries who are normal, fallible human beings.
"We have experienced across our country terrorism that kills the innocent, claiming that it is the path to freedom in God.
"The nature of God who has all power, and from whom all power comes, is to lay it aside for love's sake and thus without fear, force or manipulation to offer true freedom for every human being."
The Archbishop this year publicly spoke out against Mr Trump when he shared videos from far-right group Britain First via Twitter.
He said at the time: "It is deeply disturbing that the president of the United States has chosen to amplify the voice of far-right extremists."
Earlier on Monday morning the Church of England's most senior cleric gave his Christmas message a modern twist by publishing extracts in a Twitter thread, complete with a hashtag.
Across the globe, the Pope put the migrant crisis at the heart of his festive reflections, saying that the story of the holy birth had particular relevance as millions of people were "driven from their land".
The Archbishop struck a similar note during his sermon, saying: "We are drawn to stories of freedom and purpose.
"In Star Wars an abandoned orphan on a desert planet turns into a knight leading the struggle for freedom.
"Platform nine and three quarters takes Harry Potter into a world of magic and purpose.
"Not so in the gospel stories, even those of Christmas. Yes, the shepherds see angels. Yes, Mary and Joseph have dreams and are chosen as special people.
"Yet after the moments of miracles life goes on almost as before - the shepherds return to their sheep, Joseph settles back as a carpenter, Mary raises children.
"They flee as refugees, like over 60 million people today.
"Yet their story is the beginning of ours, it is an invitation to lives of freedom, found through God's freely offered love."
He described the annual carol service at Lambeth Palace as the "best part" of his year, bringing him into contact with those from all walks of life.
He said: "We hear from those who have recently begun to find the life Jesus offers.
"They come from all sorts of places, from people who have been trafficked into slavery to people who have known only power."
The Archbishop also made a public intervention concerning the treatment of refugees this year, condemning the Government's "regrettable" decision to end a policy to take in vulnerable children from overseas in February.