Taking the stage afterwards, Obama replied that he was "happy, honoured and moved" by her support.
"She rocks, that's the point I'm trying to make," he told cheering supporters.
"I am proud to call her a friend and I know how much we need both Bill and Hillary Clinton as a party and as a country in the months and years to come.
"We need them, we need them badly - not just my campaign, but the American people need their service and their vision and their wisdom."
The highly symbolic appearance follows a fundraising dinner in Washington DC on Thursday at which Obama met more than 200 of Clinton's financial backers in a bid to raise funds for his battle against John McCain, the Republican presidential candidate.
It also follows an announcement on Wednesday by Bill Clinton, the former US president and husband of Hillary Clinton, that he would campaign for Obama.
Rosiland Jordan, Al Jazeera's correspondent in Unity, New Hampshire, says that much of Clinton's core support - white middle class women voters - remain unconvinced by Obama.
Jordan added that Obama is hoping to convince Clinton's supporters to become an active part of his campaign.
The Illinois senator has a lot of work ahead of him to reach out to such voters and Friday's event is the latest move in such an effort, she says.
Obama told Thursday's fundraiser that he would help to pay off Hillary Clinton's $20 million campaign debt and urged his supporters to do the same.
The Illinois senator said he had given the New York senator a cheque for $4,600
from he and his wife, as the maximum legal donation by an individual is $2,300.
"I'm going to need Hillary by my side campaigning during his election, and I'm going to need all of you," he told supporters.
"Senator Clinton and I at our core agree deeply that this country needs to change."
Clinton's debt includes $12 million of her own money, however she has said she is not asking for help paying that portion of the money back.
'Whatever it takes'
Clinton, in her own speech, acknowledged that some animosity remained on both sides following their long, and often bitter, primary struggle.
However she said her supporters had to put the party first and support Obama in his upcoming presidential race against McCain.
"I know my supporters have extremely strong feelings, and I know Barack's do as well," she said.
"But we are a family, and we have an opportunity now to really demonstrate clearly we do know what's at stake, and we will do whatever it takes to try to win back this White House."
On Thursday, a joint AP-Yahoo News poll showed Obama had won slightly more than half of Clinton's former supporters, however about a quarter of Clinton's backers say they will support McCain.