The case of Jonathan Pollard "unites us all," Benjamin Netanyahu told his parliament, before reading the letter.
The request comes at a low point in Israel-U.S. relations over stalemated Israeli-Palestinian peace talks. A deal that would have given Israel advanced warplanes and political backing in exchange for an extension of a slowdown in settlement construction to restart peace talks, but it fell through.
In Washington, State Department spokesman P.J. Crowley said the administration would review the request.
With relations with the U.S. strained over the lack of progress in peace efforts, it appeared unlikely it would be approved. Previous Israeli appeals have been met coolly.
Pollard, now 56, was turned away from the Israeli Embassy in Washington in 1985 with U.S. authorities close behind. He was arrested and sentenced to life in prison for passing classified information to Israel about Iraq and other subjects.
In his letter to Obama, supplied to The Associated Press by his office, Netanyahu repeated Israeli apologies about the Pollard affair, recognized as a black mark on Israeli foreign affairs. "Its actions were wrong and unacceptable," the letter said.
Netanyahu wrote that since Pollard has now spent 25 years in prison, "I believe that a new request for clemency is highly appropriate."
The Pollard case deeply embarrassed Israel, infuriated Washington and put American Jews in an uncomfortable position of having to defend their loyalty to the U.S. while supporting Israel at the same time. American defense officials remain furious over the case.
Netanyahu listed earlier appeals to the U.S. to release Pollard, dating back to 1995, and recounted his own visit to Pollard in prison as a private citizen in 2002. He told his parliament that Pollard asked him in a letter two weeks ago to make a public request to Obama for his release.
"I believe that after 25 years that Jonathan has sat in prison and after 15 years of unsuccessful efforts, it was right to agree to this request," he said.
Netanyahu's office would not comment on the timing of the appeal.
Israeli analyst Yossi Alpher speculated that it could be part of a deal over the stalled peace talks. He said Netanyahu could sell concessions to his hard-line government more easily if he won freedom for Pollard at the same time.
On the other hand, Alpher said, it could be just a "populist gesture on Netanyahu's part directed at various circles in Israel and the American Jewish community."