Kennedy, a member of one of America's most famous political families, joins his niece, Caroline Kennedy, the daughter of the late president, in supporting Obama.
She was quoted in Sunday's New York Times as saying that Obama could inspire America in the same way that her father did.
Obama, a first-time senator from Illinois, said on ABC that "any of the Democratic candidates would love to have Ted Kennedy's support. And we have certainly actively sought it".
Kennedy was pursued for his support not only due to his family dynasty status, but also because of his broad national fundraising and political network.
In October Kennedy said he would find it "difficult" to choose which Democratic candidate to support, adding: "I've got a lot of friends who want to be president."
The Kennedy clan is split, however, on who to support in the 2008 race.
Kathleen Kennedy Townsend, another of Edward Kennedy's nieces, said on Sunday that she would support Hilary Clinton, Obama's main rival.
"I respect Caroline and Teddy's decision but I have made a different choice," she said.
"While I admire Senator Obama greatly, I have known Hillary Clinton for over 25 years and have seen first hand how she gets results.
"As a woman, leader, and person of deep convictions, I believe Hillary Clinton would make the best possible choice for president."