The new cardinals will form part of the College of Cardinals, the body that will eventually elect the pontiff's successor.
They will be confirmed Feb. 21 at a consistory, a formal gathering of cardinals presided over by the pope.
The Vatican named the five as: Bishop Karl Lehmann, the chairman of the German episcopal conference; Ukrainian Bishop Lubomyr Husar; Bolivian Archbishop Julio Terrazas Sandoval; South African Archbishop Wilfrid Fox Napier and another German, Archbishop of Paderborn Johannes Joachim Degenhart.
The pope also released the names of two cardinals whose identity had been kept secret ("in pectore," or in his heart) for political or other reasons since the last consistory in 1998.
They are both archbishops from former Soviet republics: Ukrainian Marian Jaworski and Janis Pujats of Latvia.
While the pope had been expected to reveal the identity of the two cardinals already appointed, the announcement of five new cardinals took observers by surprise.
They included a member of the controversial right-wing Opus Dei movement, Peruvian bishop Juan Luis Cipriano Thorne.
Lehmann's nomination is effectively a gesture of conciliation to the liberals, even though it will do little to change conservative dominance in the College of Cardinals.
He opposed the Vatican's decision to stop priests working at Germany's abortion counselling centers.
Abortion is legal in Germany during the first twelve weeks of pregnancy, provided the mother discusses the issue at a counselling center prior to the operation.
Priests there used to counsel pregnant women in a bid to talk them out of going ahead with an abortion, but the pope demanded they stop.
He argued that delivering a certificate allowing those women unpersuaded by the counselling to go ahead with an abortion made the church an accomplice to the procedure.
Lehmann, 64, has also worked to reform the German church on a number of issues, such as the role of women in society, the church's stance on asylum policy and remarriage after divorce.
Husar in particular will be responsible for the pope's visit to Ukraine in June, which has become the focus of tension between the Vatican and leaders of the Russian Orthodox Church.
The Orthodox Church has asked for the visit to be postponed until ongoing disputes between the two churches, over control of parishes and Orthodox allegations of Roman Catholic proselytising, can be resolved.
It has made it clear that it will sever all ties with Rome if the request is not respected.
The new cardinals will replace those in the present panel who have died or have become too old to vote for a successor.
With the new appointments, the college will have 185 members, including 135 who are younger than 80, after which a cardinal becomes too old to vote.
By the time of the consistory next month, another two cardinals will have become too old to vote -- and by the end of the year, the number of cardinals young enough to vote will have dropped to 129.