"This is a chance for me and the United States of America to say thank you to the finest citizens of this country and all countries," the president said, standing in front of the 16 recipients in the White House.
The honorees included gay rights activists, political leaders, athletes, scientists, civil rights leaders and actors.
"The men and women we honor today have led very different lives and pursued very different careers," Mr. Obama said. "What unites them is a belief... that our lives are what we make of them... and that the truest test of a person's life is what we do for one another."
The president praised the honorees for pursuing their passions with hard work and persistence, without seeking fame.
"So let them stand as an example here in the United States and around the world of what we can achieve in our own lives," he said. "Let them stand as an example of the difference we can make in the lives of others. Let each of their stories stand as an example of a life well lived."
The president read a commemoration to each recipient, starting with Nancy Goodman Brinker, who founded Susan G. Komen for the Cure in honor of her sister who suffered from breast cancer.
"In the months after her sister's death, Nancy lay awake at night thinking about the promise she had made and wondering whether one person could really make a difference," he said. "Nancy's life is the answer."
Click here for a photo essay of the recipients.
Dr. Pedro José "Joe" Greer, Jr. founded Camillus Health Concern, a clinic that now offers care to over 4,000 poor and homeless patients. "It's a life that might be distilled into a question Dr. Greer asks all of us," Mr. Obama said, "If we don't fight injustice, who will?"
Jack Kemp was a professional football player and a leader of the Republican party who served as Bob Dole's running mate in the 1996 presidential election. "A conservative thinker, a Republican leader and a defender of civil rights, he was that rare patriot who put country over party," Mr. Obama said.
As a tennis star, Billie Jean King won 12 Grand Slam titles, 101 doubles titles and 67 singles titles. "We honor what she calls all of the off-the-court stuff, what she did to broaden the reach of the game, to change how women athletes and women everywhere view themselves, and to give everyone, regardless of gender or sexual orientation, including my two daughters, a chance to compete both on the court and in life," the president said.
The president, in honoring civil rights leader and founder of the Southern Christian Leadership Conference Reverend Joseph Lowery, quoted one of his sermons: "There's good crazy and there's bad crazy. And sometimes you need a little bit of that good crazy to make the world a better place."
Dr. Joseph Medicine Crow was the first member of his tribe to attend college and earn a master's and served in World War II. Mr. Obama said, "Dr. Medicine Crow's life reflects not only the warrior spirit of the Crow people, but America's highest ideals."
Harvey Milk was one of the first openly gay Americans elected to public office, and the president said, "his message of hope -- hope unashamed, hope unafraid -- could not ever be silenced."
Famous African-American actor Sidney Poitier, the president said, does not simply make movies, but "milestones of artistic excellence, milestones of America's progress."
Delores Concita Figueroa del Rivero, known on stage as Chita Rivera, "has shown that life can indeed be bright in America," Mr. Obama said.
The president called Mary Robinson, the first woman elected president of Ireland before being appointed U.N. High Commissioner for Human Rights, "a crusader for women and those without a voice in Ireland."
Janet Rowley, who put her family before practicing medicine, discovered that showed cancer is genetic. "All of us have been touched in some way by cancer, including my family," Mr. Obama said. "And so, we can all be thankful that what began as a hobby became a life's work for Janet."
Muhammad Yunus, the president said, "was just trying to help a village, but he somehow managed to change the world" by founding Grameen Bank, which distributes micro loans to the poor.
Sen. Edward Kennedy "has made a difference for us all," Mr. Obama said.
Below is a full list of the the 2009 Presidential Medal of Freedom recipients:
* Nancy Goodman Brinker
* Pedro Jose Greer, Jr.
* Joanne Kemp, accepting award on behalf of her deceased husband, Jack Kemp
* Kara Kennedy, accepting award on behalf of her father, Senator Edward M. Kennedy
* Billie Jean King
* Reverend Joseph Lowery
* Joe Medicine Crow - High Bird
* Stuart Milk, accepting award on behalf of his deceased uncle, Harvey Milk
* Sandra Day O'Connor
* Sidney Poitier
* Chita Rivera
* Mary Robinson
* Janet Davison Rowley
* Archbishop Emeritus Desmond Tutu
* Muhammad Yunus
* Stephen Hawking