Among the recipients of the Medal of Freedom: Former Supreme Court Justice Sandra Day O'Connor, Archbishop Desmond Tutu and noted physicist Stephen Hawking, reports CBS News correspondent Bill Plante.
"His work in theoretical physics, which I will not attempt to explain further here, has advanced our understanding of the universe," Mr. Obama said.
Honored, but not present, Sen. Edward Kennedy, whose daughter Cara accepted on his behalf. He continues his battle with brain cancer at his home in Massachusetts.
"The life of Senator Edward M. Kennedy has made a difference for us all," Mr. Obama said.
More than 45 years in the Senate, Kennedy has been a champion of liberal causes and chair of the powerful health committee.
But now he's now missing the pitched battle over health care reform, an issue he has called the cause of his life. He vowed, at a White House event in March, to see it passed.
"I'm looking forward to being a foot soldier in this undertaking," Kennedy said in March. "This time we will not fail."
Biographer Peter Canellos said Kennedy's absence has been keenly felt.
"He's a great deal making politician and there in a position where they need to put together a compromise bill and he's the ultimate at achieving those kinds of compromises," Canellos said.
The president has modeled his career on the Kennedy family legacy, and it was Sen. Kennedy's early endorsement which gave Barack Obama a big lift in his battle for the nomination.
"I think Barak Obama you know, appreciates him as this seamless link to a time of hope and optimism in the early 60s," Canellos said.
And now, with the death this week of his sister Eunice Kennedy Shriver, known for starting the Special Olympics, that era is coming to an end.
"Ted's story and the story of his family is known to all," Mr. Obama said in April. "It's a story of service and it's also the story of America."
The last time Sen. Kennedy appeared in Washington, it was to attend the singing of the Serve America Act, a public service bill named in his honor.