He praised the struggling automaker, which filed for bankruptcy Monday, for submitting a "viable, achievable plan that will give this iconic American company a chance to rise again."
The deal reached with GM's stakeholders, Obama said at the White House, is "tough, but fair."
Obama noted that GM will receive $30 billion in additional funding from taxpayers, giving the public a 60 percent share in the company.
The government agreed to become a "reluctant" shareholder, he said, because that is the only way GM can survive.
He said the federal government will refrain from exercising its shareholder rights in all but the most fundamental decisions.
At the same time, however, he announced that, under GM's restructuring plan, the company will begin to build a larger share of its cars in the United States.
Obama said that, from the beginning, he had made it clear he wouldn't "kick the can down the road" and let GM and Chrysler "become permanent wards of the state." At the same time, however, he also recognized the importance of the companies to the broader economy.