Obama assured Netanyahu he had Israel's "back" but also stressed before Oval Office talks that he saw a "window" for diplomacy, despite rampant speculation Israel could soon mount high risk go-it-alone military action.
The leaders, who have had a famously testy relationship, met for two hours of talks amid clear signs of differences on the imminence of the perceived Iranian nuclear threat, if not its ultimate danger to both nations.
Obama is also facing a curtain of Republican fire on Iran as he cranks up his re-election campaign from opponents who accuse him of appeasement and of deserting America's closest Middle Eastern ally.
In an impassioned on-camera statement, Netanyahu told Obama: "Israel must have the ability always to defend itself, by itself, against any threat.
"That's why my supreme responsibility as prime minister of Israel is to ensure that Israel remains the master of its fate," said Netanyahu.
The Obama administration has signalled that it does not yet believe Iran has taken a choice to develop a nuclear weapon, or that the time is right for military action, preferring to give biting new sanctions time to work.
Israel, which sees an Iranian nuclear weapon as a threat to its existence, however believes that Iran may be on the cusp of "break out" capacity - the moment when it could quickly produce weapons-grade uranium.
A senior US official said that Washington now believed after the meeting that Netanyahu understood that Obama was deeply serious about preventing Iran acquiring nuclear weapons.
An Israeli official commented that Israeli concerns were now also widely understood, but did not elaborate.
In the days before Netanyahu arrived, Obama bolstered his rhetoric on Iran - making clear he did not "bluff" and would order military if necessary, but refused to set public "red lines" for action.
The US official said the administration believed it would have up to a year to decide on how to respond should Iran decide to begin enriching uranium to weapons-grade quality. Israel does not share that timetable.
In a nod to the tragic history of the Jewish people, Obama recognised that it was "unacceptable" for Israel to tolerate Iran developing a nuclear weapon after calling for its destruction.
And despite slamming "loose talk" about war on Sunday in a speech to the top pro-Israel lobby AIPAC, Obama said his intent was prevention, and not living with an Iranian bomb.
"I reserve all options and my policy here is not going to be one of containment.
"My policy is prevention of Iran obtaining nuclear weapons ... when I say all options are on the table, I mean it," Obama said.
But the president, seeking to preserve a way out for Iran short of war, said he believed a diplomatic solution was still possible.
"We do believe there is still a window that allows for a diplomatic resolution to this issue."
Washington fears that an early, pre-emptive strike from Israel could trigger a fierce reaction from Iran, unleash regional turmoil, endanger US troops in the region and drag Washington into a new war.
It is also uncertain whether Israel possesses sufficient military capacity to end Iran's underground pursuit of the nuclear arsenal it denies seeking, and could at best set back the programme just a few years.
Israel meanwhile is worried that despite their potency, increasingly tough US and European sanctions on Iran and its central bank and vital petroleum industry will not convince Tehran to renounce a nuclear arsenal.
The Islamic Republic denies it is seeking nuclear weapons.
Washington also warns that tensions over Iran benefit the Islamic Republic by hiking the price of oil, and rock energy markets in a way that could crimp the slow yet building economic recovery.
Officials from both sides said that despite their differences in the past, the meeting between Obama and Netanyahu went ahead in a productive atmosphere.
The nuclear stand-off has pushed the Israeli-Palestinian conflict into the background, although Obama did raise the stalled talks.
He pledged to work for "a calmer set of discussions between the Israelis and the Palestinians" in a bid to seek a "peaceful resolution to that long-standing conflict".
Later, Netanyahu courted Israel's backers in the US Congress. Speaking to around 13 000 delegates at a conference of the top pro-Israel lobbying group AIPAC, Netanyahu asked them to pay homage to the solidly supportive US legislature.
"I want to ask the 13 000 supporters of the state of Israel to stand up and applaud the representatives of the United States," he said, prompting a standing ovation.
"Democrats and Republicans alike, I salute your unwavering support for the Jewish people," he added.
Netanyahu will meet Congressional leaders on Tuesday, winding up a two-day visit to the United States.