"I strongly condemn these unjust actions, and I join with the American people in mourning each and every innocent life that is lost."
Obama came to power in January offering dialogue with US foes, including Iran, which the previous Bush administration largely refused to engage.
"We're still waiting to see how it plays itself out," Obama said of the current crisis.
"My position coming into this office has been that the United States has core national security interests in making sure that Iran doesn't possess a nuclear weapon and it stops exporting terrorism outside of its borders.
"What we've been seeing over the last several days, the last couple of weeks, obviously is not encouraging, in terms of the path that this regime may choose to take."
Obama insisted he was not interfering in Iranian affairs, as alleged by the Tehran government, but said he had to "bear witness to the courage and dignity of the Iranian people."
He was asked specifically about graphic footage of the death of Neda Agha-Soltan, a bystander apparently shot in the chest who died on the street, which has shot around the Internet as a symbol of the post-election uprising.
"It's heartbreaking, and I think that anybody who sees it knows that there's something fundamentally unjust about that.
"I think that when a young woman gets shot on the street when she gets out of her car, that's a problem."
Some Republicans, including Obama's 2008 election rival John McCain, have accused the president of being timid and too slow to embrace the protests sparked by President Mahmoud Ahmadinejad's disputed win over Mir Hossein Mousavi.
But he hit back: "Only I'm the president of the United States... in the hothouse of Washington, there may be all kinds of stuff going back and forth in terms of Republican critics versus the administration.
"That's not what is relevant to the Iranian people," Obama said.
Obama has pursued a carefully calibrated position towards Iran, balancing sympathy for protestors with a desire not to be seen "meddling" in the affairs of an arch-foe that Washington suspects of developing nuclear weapons.
Explaining his reluctance to delve into Tehran's internal politics, Obama also complained that some of his circumspect words had already been willfully misinterpreted in Iran.
"They've got some of the comments that I've made being mistranslated in Iran, suggesting that I'm telling rioters to go out and riot some more.
"There are reports suggesting that the CIA is behind all this -- all of which is patently false but it gives you a sense of the narrative that the Iranian government would love to play into."
With pundits predicting Obama's political honeymoon will soon be over, leaving only a tough slog to enact key reforms like healthcare and financial regulation, the president sought a swift jolt of momentum from the news conference.
He predicted US unemployment would likely climb above 10 percent, as the country battles its worst recession since the Great Depression of the 1930s, but said a new economic stimulus package was "not yet" needed.
The president also offered his full support for legislation on climate change which the US Congress is prepared to put to a vote.
And he said that if lawmakers did not embrace his call for sweeping health reform, including a government component, every American would soon end up with worse health coverage.
Tuesday's event was Obama's fourth solo White House news conference since taking office in January and his first such event since the end of April, when he went before the cameras to mark his symbolic first 100 days in office.