Two major outbreaks of violence since June between Muslims and ethnic Rakhine Buddhists in the state have left 180 people dead and more than 110,000 displaced.
Most of those who fled their homes were stateless Rohingya Muslims, who have faced decades of discrimination.
"Today, we look at the recent violence in Rakhine state that has caused so much suffering, and we see the danger of continued tensions there," Obama said in his address at Yangon University.
"For too long, the people of this state, including ethnic Rakhine, have faced crushing poverty and persecution. But there's no excuse for violence against innocent people, and the Rohingya hold within themselves the same dignity as you do, and I do," he added.
Myanmar's reformist government is under pressure to give citizenship to the Rohingya as it comes under international scrutiny, with warnings that the conflict threatens its democratic transition.