President Vladimir Putin's blunt show of Russian power by sending troops into Crimea, presents the US president with challenges to his personal and political credibility.
NATO is also in the spotlight, suddenly facing a Kremlin-engineered threat close to its own borders after years retooling its mission to combat terrorism and more than a decade fighting in Afghanistan.
As leader of the alliance's most powerful member and effective guarantor of a weakened Europe's security, it falls to Obama to lead the West's response.
It is a role that was familiar to two generations of US presidents, but one that fell out of fashion with the eclipse of the Soviet Union.
"President Obama is facing the most difficult international crisis of his presidency," said Nicholas Burns, former US ambassador to NATO.
"I think most Europeans and Americans would agree it is the most serious threat to Europe's security since the end of the Cold War."
The Ukraine crisis follows Syria's torment, the Libyan war and the souring of the Arab Spring as the latest disruption to Obama's best laid foreign policy plans.
He had set out to remold the US role in the world by resetting testy US relations with Russia, ending the wars in Iraq and Afghanistan, waging a drone campaign against Al-Qaeda and rebalancing US power to emerging Asia. But now he must deal with what top aides describe as a 19th Century style crisis -- a land grab in Europe.
Dutiful friend of Europe
Obama has frequently praised NATO as "the most successful alliance in history."
But his interactions with Europe often seem more dutiful than enthusiastic. He lacks the Europhile zeal of his Secretary of State John Kerry, but knows the continent is now looking to him for leadership.
Political stakes for Obama are also elevated because his own leadership style has drawn criticism at home and abroad.
Republicans have always accused Obama of weakness, and the charge has become a cliche.
But wider questions about Obama's global authority surfaced last year after he balked at enforcing a red line over chemical weapons use in Syria.
Now, despite his reluctance to play Cold War chess with Putin, Obama's foes feel the Russian leader has out-thought him on Syria, Ukraine and Moscow's asylum offer to fugitive US intelligence leaker Edward Snowden. Obama's instinct for multilateral solutions has underpinned his moves so far on Ukraine.
Over a weekend on the phone, he enlisted support from NATO allies Britain, Canada, France and Germany and orchestrated an implicit threat from the G8 to kick Russia out of the rich nations club.
Obama also held what was by all accounts a contentious 90-minute call with Putin.
The president said Monday he was working on economic and diplomatic punishments to "isolate" Moscow if it did not change course, apparently seeking to stop Putin's Crimea adventure spilling over into wider Ukraine.
Most western analysts agree that NATO does not have a treaty obligation to defend the rest of Ukraine.
And military action to support the country is unthinkable in the West: a fact that Putin understands.
But an undeniable chill has been sent through through Europe, especially, in former Soviet states, meaning Obama will be looked to for reassurance.
But the hard work of stiffening Europe's spine is only just beginning.
In Germany for instance, Foreign Minister Frank-Walter Steinmeier undercut threats on the G8 -- saying the group was vital as the only place Europe can talk to Moscow.
"I do think (Obama) has to step up and provide a level of leadership at a time when it is not going to be easy," said Charles Kupchan of the Council on Foreign Relations.
Europe's calculations may be partly influenced by its reliance on Russian natural gas, much of which is piped through Ukraine.
The continent is also drained by an economic crisis which has meant savage defense cuts and less emphasis on security issues. And the mindset of NATO has shifted from its eastern borders to transcontinental threats like terrorism.
"This is a key moment for the NATO alliance," said Nile Gardiner, of the Heritage Foundation, a conservative think tank in Washington.
"If NATO cannot show real resolve, it is going to be significantly damaged."
Obama will have the chance to bolster that resolve when he visits alliance headquarters in Brussels in a previously scheduled visit at the end of the month.