The White House says Obama condemned the rocket attacks and said Israel has the right to self-defense. But Obama also urged both sides not to escalate the crisis and to restore calm.
Obama also relayed concerns about a Palestinian-American teenager who was detained and apparently beaten by Israeli authorities. Obama says Israel has worked to resolve that situation.
The two leaders also discussed Iran. Obama says the US won't accept any deal that doesn't ensure Iran's nuclear program is peaceful.
With IDF ground troops amassing on the Gaza border, and Palestinians living near the frontier being told to evacuate their homes, Hamas is seriously worried about the prospects of a ground invasion - but is trying hard to convey an air of nonchalance.
A statement issued by the group's military wing declared that an Israeli ground operation would be "an opportunity for us to free Palestinian prisoners from Israeli jails. Israel will not be the one to decide when and on what terms the war ends."
Meanwhile, the US is trying to prevent the same invasion, even as Palestinian President Mahmoud Abbas admits that talks have failed.
Speaking at a meeting at the Muqata government compound in Ramallah, Abbas said that, "We don't want either side to present terms and conditions to restore the calm – the most important thing is to avoid bloodshed. Egypt was in contact with both sides, but unfortunately these talks failed."
Abbas said that other attempts to end the fighting had also had little effect.
"We talked to the American side, and asked them to stop the Israeli military operation while we in parallel convinced Hamas to stop firing rockets. Unfortunately we were unable to do so."
"No one wants to see a ground invasion," State Department spokeswoman Jen Psaki said earlier Thursday. She said that while Israel is utilizing its right to self-defense, it does not want a ground operation.
The US has made it clear that it is willing to talk to any country that can help and put influence Hamas to stop the rocket fire.
Secretary of State John Kerry said Thursday that while no country could accept such rocket attacks, de-escalating the crisis was ultimately in everyone's interests.
Kerry said he spoke to Netanyahu and Abbas, and that the goal was to see if there was some way to restore peace.
In his conversation with Abbas, Kerry repeated American concerns over the escalation and expressed US willingness to help in ending the rockets.
Kerry was, according to Psaki, using all of the means at his disposal to stop the rockets.
In a message by the military – wing of Hamas, spokesman Abu Obeida emphasized that the military wing prepared itself for the long struggle. "The enemy has noticed that we have multiplied out attacks in response to its massacres against innocent lives.
"The whole world should know that our people have announced a revolution in the West Bank, in Jerusalem, and in the territories occupied in 1948."
A correspondent on Hamas' Al-Aqsa television station responded to the military wing's statement: "For these acts I must salute the Al-Aqsa Brigade… this is a victory speech."
Meanwhile, Hamas propaganda efforts in Gaza continued. In videos released by Hamas, aired on Al-Aqsa channel, the Gaza-based terrorist organization threatened Israel. "Our missiles will turn Tel Aviv into a ball of fire."
According to Palestinian sources, since the beginning of Operation Protective Edge, 85 Palestinians have been killed, including children, and hundreds have been injured.