"Tonight, I can report to the American people and to the world that the United States has conducted an operation that killed Osama bin Laden, the leader of Al Qaeda, and a terrorist who's responsible for the murder of thousands of innocent men, women and children," Obama said.
Obama said in the historic address from the White House that he had directed the US armed forces to launch an attack against a compound in Pakistan on Sunday acting on a lead that first emerged last August.
"A small team of Americans carried out the operation with extraordinary courage and capability. No Americans were harmed. They took care to avoid civilian casualties.
"After a firefight, they killed Osama bin laden and took custody of his body."
"Justice has been done."
Pakistani intelligence officials also confirmed bin Laden's death.
"Yes I can confirm that he was killed in a highly sensitive intelligence operation," the official told AFP on condition of anonymity.
The official said he was unable to immediately confirm where, how or when bin Laden was killed.
Asked whether Pakistani intelligence participated in the operation he said only: "It was a highly sensitive intelligence operation."
US armed forces have been hunting the Saudi terror kingpin for years, an effort that was redoubled following the attacks by hijacked airliners on the World Trade Center in New York and the Pentagon which killed 3,000 people in 2001.
But bin Laden always managed to evade US armed forces and a massive manhunt, and was most often thought to be hiding out in Pakistan and Afghanistan border areas.
The death of bin Laden will raise huge questions about the future shape of Al-Qaeda and also have steep implications for US security and foreign policy 10 years into a global anti-terror campaign.
It will also provoke fears that the United States and its allies will face retaliation from supporters of bin Laden and other extremist groups.
The death of bin Laden will also cast a new complexion on the increasingly unpopular war in Afghanistan, where 100,000 troops are still in the country battling the Taliban and Al Qaeda after a decade of war.
Former president George W. Bush first said he wanted bin Laden "dead or alive" in the weeks after the September 11 attacks.
But bin Laden frequently taunted Bush, and after he took office in 2009, Obama, with taped messages.
Bin Laden was top of America's most wanted list, and was blamed by Washington for masterminding a string of other attacks, including the attacks on US embassies in Kenya and Africa in 1998.
Chants of "USA, USA" rang out from a huge and quickly building crowd outside the White House as the news of bin Laden's death sent a electric charge through Washington.
People cheered waved the US flag and sang the US national anthem.
Despite the decade that has elapsed since the September 11 attacks, the event, one of the most traumatic in US history, still stirs raw emotions, and his demise will be celebrated across the United States.
In the Upstream restaurant in the old market area of Omaha, Nebraska, owners switched TV channels from the evening's sports games as news of Laden's death trickled in.
Patrons cheered and called friends to tell them of the news.
"We are going to be able to remember sitting here, you are going to remember where you where," said Vaughn Wickham from Spirit Lake, Iowa.
The US dollar rose against the euro and the yen when it emerged that Obama would announce the death of Al Qaeda leader Osama bin Laden, nearly 10 years after the September 11 attacks.
The dollar rose against the euro, which fetched 1.4764 dollars from 1.4864 in earlier trade. The dollar was at 81.66 yen from 81.19 earlier.