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He said: "I am announcing that the American combat mission in Iraq has ended. Operation Iraqi Freedom is over, and the Iraqi people now have lead responsibility for the security of their country.
"At every turn, America's men and women in uniform have served with courage and resolve. As Commander-in-Chief, I am proud of their service. Like all Americans, I am awed by their sacrifice, and by the sacrifices of their families."
About 50,000 US troops will remain in the country until the end of 2011.
Mr Obama added: "Ending this war is not only in Iraq's interest — it is in our own. The United States has paid a huge price to put the future of Iraq in the hands of its people.
"We have sent our young men and women to make enormous sacrifices in Iraq, and spent vast resources abroad at a time of tight budgets at home.
"We have met our responsibility. Now, it is time to turn the page."
He said the Iraq mission "should also serve as a message to the world that the United States of America intends to sustain and strengthen our leadership in this young century".
Mr Obama yesterday met troops who had served in Iraq and talked to his predecessor George Bush, who had ordered the Iraq invasion.
Despite originally opposing the decision to go to war, Mr Obama paid tribute to Bush, saying: "It's well known that he and I disagreed about the war from its outset.
"Yet no one could doubt President Bush's support for our troops, or his love of country and commitment to our security. As I have said, there were patriots who supported this war, and patriots who opposed it. And all of us are united in appreciation for our servicemen and women, and our hope for Iraq's future."
Iraqi prime minister Nouri al Maliki said: "I assure you that the Iraqi security troops are capable and qualified to shoulder the responsibility."
Mr Obama wants to start withdrawing troops from Afghanistan from next July.
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