Obama issued a statement to the Iranian people on the occasion of Nowruz, the Iranian New Year. His greeting followed two days of nuclear talks between Iran and Western negotiators in Vienna.
"There is a chance to reach an agreement if Iran takes meaningful and verifiable steps to assure the world that its nuclear program is for peaceful purposes only," he said.
Iran under the terms of an interim agreement reached in November suspended some of its nuclear research activity in exchange for modest relief from economic sanctions.
Iranian President Hassan Rouhani said Wednesday he was confident a final deal could be reached before the end of the year.
"We do not want to make anybody worried," he was quoted by the semiofficial Fars News Agency as saying. "We are negotiating for a final agreement, which is reachable within six months."
The International Atomic Energy Agency has said it couldn't verify that all of Iran's nuclear activity was for peaceful purposes, though Iran denies its pursuing weapons technology.
Obama said he recognized negotiations "will be difficult" but a diplomatic agreement was the best option for the Iranian people.
"If Iran meets its international obligations, we know where the path of dialogue and greater trust and cooperation can lead," he said. "It will mean more opportunities for Iranians to trade and forge ties with the rest of the world."