"We will destroy this terrorist organisation," he vowed.
Ending a trip to Asia, Obama implored Americans not to let the specter of terror cause them to compromise their values or change the way they live.
"We do not succumb to fear," he said. "The most powerful tool we have to fight ISIL is to say that we're not afraid, to not elevate them, to somehow buy into their fantasy that they're doing something important," Obama said, using an acronym for the terrorist organisation.
Rejecting the notion of an existential threat, Obama said IS "can't beat us on the battlefield, so they try to terrorise us into being afraid."
"I think it is absolutely vital for every country, every leader, to send a signal that the viciousness of a handful of killers does not stop the world from doing vital business," Obama said.
The president and world leaders are set to gather in Paris next week for long-scheduled climate talks. The White House has insisted there will be no change in plans.
Long before that, Obama had urged Putin to use Russia's air campaign in Syria to target IS, not US-backed rebel groups fighting Syrian President Bashar Assad, a Moscow ally.
US officials have said Russia has started focusing some airstrikes against IS.
Obama said it was not clear whether Putin could work effectively with the US-led coalition.
Putin "needs to go after the people who killed Russia's citizens," Obama said. The two met last week during an economic summit in Turkey.
US officials have said IS aspires to attack America but they have played down any specific threat.
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