"Today, as I suspend my campaign, I congratulate him on the victory he has won and the extraordinary race he has run. I endorse him and throw my full support behind him."
But Clinton paid tribute to the Illinois senator, saying he has "strength, determination ... grace and grit".
"In this campaign he has inspired so many to become involved in the democratic process and invest it in our common future," she said.
"I intended to win back the White House and put our country back on the path to peace, prosperity and progress - that is exactly what we are going to do by ensuring that Barack Obama walks through the doors of the Oval office."
Reflecting Clinton's full endorsement of her former rival, her website is now carrying an appeal for Democrats to support Obama.
Obama responded to Clinton's endorsement by saying he was "thrilled and honoured to have Senator Clinton's support".
"No one knows better than Senator Clinton how desperately America and the American people need change, and I know she will continue to be in the forefront of that battle this fall and for years to come," his statement said.
Todd Kent, professor of American political and foreign policy at Texas A&M University in Qatar, said Clinton spent a great deal of her address referring to her own ideals and aims.
"If you look at the numbers, Clinton spent about four minutes talking about Obama and 24 minutes on Hillary Clinton," he told Al Jazeera.
"This speech was really about Hillary Clinton - who she is, about healthcare [Clinton's signature policy interest], women's issues. She didn't want us to forget ... She lacked a bit of passion when talking about Barack Obama."
Kent said that the partial negative response among some Democrat supporters that Clinton received when she announced her endorsement of Obama would soon recede.
"I think this is an emotional reponse that you get when you have worked really hard for something and you do not win," he said.
"I think that over the summer you will see Democrats come home - historically they have always done it. Barack Obama is the kind of communicator that can draw people to him."
Terry McAuliffe, chairman of the Clinton campaign, said Clinton had been emphatic in her call for people to support Obama.
"We have to all be unified - she said it over and over, she could not have been stonger," he told Al Jazeera.
But McAuliffe acknowledged that some Democrats are divided after a long and bruising campaign for the nomination.
"We have never had a campaign go this long and be this close ... I think it will take a little bit of time [for Democrats to come together]," he said.
Clinton's endorsement comes after she and Obama held private talks on Thursday at the Washington home of a California Democratic senator.
Obama won enough delegates to secure the party's nomination after primaries in Montana and South Dakota on Tuesday.
A statement from Clinton's campaign on Thursday said that she was "not seeking the vice-presidency", but later said the "choice here is Senator Obama's and his alone".
Many analysts said Clinton's endorsement of Obama was a necessary first step to unifying the Democratic Party.
Jennifer Palmieri, of the Centre for American Progress and former communications adviser in the Clinton White House, said: "If the country has negative feelings about the two Clintons, it is not going to help Obama.
"So it is in his interest to the degree to which they need rehabilitation for him to want to be a part of it."
The 16-month campaign for the Democratic presidential nomination ended on Tuesday, but Clinton did not immediately concede defeat.
Clinton's endorsement is seen by many experts as intrinsic to the effectiveness of Obama's presidential campaign.
|Obama won enough delegates to secure the |
party's nomination on Tuesday [AFP]
She gained more than 17 million votes during the Democratic battle and Obama will need many of those to defeat John McCain, the presumptive Republican party presidential candidate, in November's general election.
The Obama campaign sought on Friday to dispel any talk that there would be a decision soon on who Obama would pick as his running mate.
"It's important that this be done in a careful, methodical way. We're not going to be rushed into making any pick, whomever that might be," Obama's communications director, Robert Gibbs, said.
Some have suggested that Clinton, 60, follow the lead of Edward Kennedy, who returned to the senate after a failed presidential bid.
He went one to became one of the senate's most effective legislators, helping to craft landmark bills.
Clinton has won many admirers in the senate, both Democrat and Republican, while working with them to draft bills on matters from national security to health care.
In doing so, she has become one of America's most powerful women.
Clinton joined the senate in January 2001 after eight years in the White House as a top aide and wife of Bill Clinton.