U.S.-born Adam Gadahn also tore up his American passport as part of a symbolic protest in the nearly hour-long rhetoric-dominated tape - al Qaeda's first message of the new year.
The release comes just three days before Bush is scheduled to arrive in Israel for a weeklong trip that will also bring him to the West Bank, Kuwait, Bahrain, the United Arab Emirates, Saudi Arabia and Egypt as part of his push for an Israeli-Palestinian peace agreement.
"Now we direct an urgent call to our militant brothers in Muslim Palestine and the Arab peninsula ... to be ready to receive the Crusader slayer Bush in his visit to Muslim Palestine and the Arab peninsula in the beginning of January and to receive him not with flowers or clapping but with bombs and booby-trapped vehicles," Gadahn, 29, said in Arabic.
"This just shows once again, al Qaeda offers nothing but violence and death," National Security Council spokesman Gordon Johndroe said. "The purpose of President Bush's trip is to meet with mainstream Arab leaders and people to talk about a positive future for the region, based on hope and opportunity."
As for Gadahn's tearing up his U.S. passport, Johndroe said: "He is wanted for treason against the United States. His passport was already void."
During the rest of the 50-minute video, titled "An Invitation to Reflection and Repentance," Gadahn, who was raised in California, spoke mostly in English, appearing to specifically address the American people. He said al Qaeda felt the need to release the statement after Washington's "defeat" in Iraq and Afghanistan and failed attempts by the Bush administration to bring peace to the Middle East.
"We felt it necessary to address the American people and explain to them some of the facts about these critical and fast-moving events," said Gadahn, who wore a white-and-red headscarf and sat behind a desk with a laptop computer and coffee mug nearby.
"The first questions Americans might ask is has America really been defeated? The answer is yes and on all fronts," he added.
The video could not immediately be independently verified, but it appeared on a Web site often used by Islamic militants and carried the logo of al Qaeda's media wing, al-Sahab. At the beginning of the video, the date December 2007 was displayed. Gadahn also mentioned Robert Hawkins, who killed eight people at a mall in Omaha, Neb. on Dec. 5, suggesting the tape was made sometime after then.
Gadahn, also known as Azzam al-Amriki, was charged with treason in the U.S. in 2006 and has been wanted since 2004 by the FBI, which is offering a $1 million reward for information leading to his arrest or conviction.
He has appeared in several al Qaeda videos including one in August when he threatened new attacks on foreign embassies. In May, al Qaeda released another video featuring Gadahn, who warned Bush to end U.S. involvement in Muslim lands or face an attack worse than the Sept. 11, 2001, strikes.
Ben Venzke, the head of IntelCenter, a U.S. group that monitors and analyzes militant messages, said much of Gadahn's new video shares a similar tone as his previous messages.
"It fits into al Qaeda's notion of providing warning and opportunity for people to correct their ways to avoid an attack," he said.
In the video, Gadahn lashed out repeatedly at the United States for its wars in Afghanistan and Iraq and its close ties to Israel and the leaders of some Muslim countries, including Egypt and Pakistan, which he described as some of the "worst dictators and tyrants."
Gadahn also criticized Christianity, which he called "baseless and doubt-filled," and urged Americans - including soldiers who fought in Vietnam, Iraq and Afghanistan - to convert to Islam.
"Listen to me, and listen to me carefully, before you lose your mind to flashbacks, and drugs and drink-induced dementia and before your demons drive you to self-destruction and suicide, in these verses (in the Quran), God calls out to each and every one of you saying God forgives all sins ... if you simply stop and repent," he said.
At one point in the video, Gadahn took out his U.S. passport, showed it to the camera and tore it into several pieces.
"In symbolic rejection of the American citizenship that honorable and decent and compassionate people are ashamed to carry, I will now proceed to destroy my American passport," he said.
"But don't get too excited, I don't need it to travel anyway," he added with a smile after tearing it apart.
Despite Gadahn's passport destruction, Venzke cautioned against dismissing him as a crazy kid and said his warnings should be taken seriously.
"The reality is al Qaeda and al-Sahab do not put anything out without a lot of planning ... They are very deliberate," he said.
Gadahn is the first American to be charged with treason in more than 50 years and could face the death penalty if convicted. He also was indicted on a charge of providing material support to terrorists.
Earlier this month, FBI spokesman Richard Kolko said the agency would review the latest tape for intelligence value and vowed never to give up the hunt for Gadahn.