He said, "I do not view it as a recognition of my own accomplishments but rather as an affirmation of American leadership on behalf of aspirations held by people in all nations."
Obama added, "I do not feel that I deserve to be in the company of so many transformative figures that have been honored by this prize."
He said he would accept the prize as a "call to action", and "a call for all nations to confront the common challenges of the 21st century".
"We cannot tolerate a world in which nuclear weapons spread to more nations and in which the terror of a nuclear holocaust endangers more people," Obama added.
"And that's why we've begun to take concrete steps to pursue a world without nuclear weapons: because all nations have the right to pursue peaceful nuclear power, but all nations have the responsibility to demonstrate their peaceful intentions."
The president also mentioned the threat of climate change, calling on all nations to "accept their share of responsibility for transforming the way that we use energy".
He also mentioned the Israeli-Palestinian conflict, saying, "We must all do our part to resolve those conflicts that have caused so much pain and hardship over so many years. And that effort must include an unwavering commitment to finally realize that - the rights of all Israelis and Palestinians to live in peace and security in nations of their own."
The Norwegian Nobel Committee praised Obama for "his extraordinary efforts to strengthen international diplomacy and cooperation between peoples," citing his fledgling push for nuclear disarmament and his outreach to the Muslim world.
But critics called the Nobel's committee's decision premature, given that Obama so far has made little tangible headway as he grapples with challenges ranging from the war in Afghanistan and the Israeli-Palestinian conflict to nuclear standoffs with Iran and North Korea.
The White House had no idea the Nobel announcement was coming. Obama, who got the news of the prize in a pre-dawn call from his press secretary, now also has the burden of living up to its expectations.