Obama began his day with a visit to the Walter Reed Medical Centre for the treatment of wounded US troops before joining a community renovation project in the capital.
At one point, at a shelter for homeless teenagers, Obama took off his jacket and helped as workers painted a wall.
Later he attend a number of dinners honouring champions of political bipartisanship including John McCain, the defeated Republican candidate for the presidency; Colin Powell, a former secretary of state; and Joe Biden, the vice-president-elect.
Aides have said that in his inaugural address, Obama would call for a spirit of national sacrifice amid an economic recession as well as wars in Afghanistan and Iraq.
"We hear from his aides, and the president-elect himself, that the themes of restoring trust and public confidence in government are going to be prominent," Al Jazeera's Rob Reynolds, reporting from Washington, said.
"The inaugural address is sometimes a harbinger, sometimes it sets the tone for an entire administration."
Up to two million people are expected to make their way to Washington for the swearing-in ceremony and inaugural parade.
"I'm 41 and I've never experienced anything this big," Keith Smith, a Washington resident and city employee, said.
"There is a whole lot of energy and excitement in the atmosphere - it takes our mind off the bad economy and job losses."
Torrey Pocock, a self-confessed Republican voter, said he was in Washington to witness a festival of democracy.
|Americans were travelling from across the US to attend the inauguration [AFP]
"For the country, given its past history [of racism], to put its trust in an African-American president is an incredible thing," he said.
"This is an opportunity to see a bloodless revolution, a opportunity to completely change regimes."
On Sunday, Obama delivered a speech before the statue of Abraham Lincoln, another preisdent who hailed from Ilinois, on the same steps where King made his I Have A Dream speech.
That address became one of the most famous speeches in US history.
A number of stars including Bruce Springsteen, U2 and Stevie Wonder performed during Sunday's events.