The obelisk does not signify pagan worship, although it undoubtedly has pagan origins. Where St. Peter’s now stands once stood a Roman circus erected by the infamous Roman Emperor Caligula. Caligula placed this obelisk, a symbol of ancient Egyptian religion, in this circus. Many Christians were executed in this circus, particularly during the reign of the Emperor Nero, and would’ve seen the obelisk in their dying moments as they looked upward. Christian tradition holds that Peter was one of those martyrs.
In homage to these early Christian martyrs, against whom death could not ultimately prevail (John 11:25), the Church erected St. Peter’s Basilica on the location of the former circus, and placed the obelisk as a reminder of the victory of both the Church in general and early Christians in particular over the pagan Roman Empire.
There is further evidence refuting the charge of pagan worship by the Catholic Church. In pagan times, a golden ball symbolizing worship of the sun topped the obelisk. However, the Church long ago replaced the golden ball with a cross, in which is contained a relic of the True Cross. Which, ironically, is a fulfillment of Jeremiah 43:13.