In a ceremony in Prague, Czech Republic, Obama and Medvedev both signed their names to the document, which would significantly reduce the nuclear weapons each country will deploy and includes a verification regime allowing both countries to build trust, Obama said immediately after the signing ceremony.
The United States and Russia have 90 percent of the world's nuclear weapons, a legacy of the Cold War, Obama said.
"(This) day demonstrates the determination of the United States and Russia ... to pursue responsible global leadership," Obama said. "Together, we are keeping our commitments under the Nuclear Non-Proliferation Treaty, which must be the foundation of global non-proliferation."
The new Strategic Arms Reduction Treaty calls for the reduction of 1,500 developed weapons, 700 deployed missiles and 800 deployed and non-deployed launchers, Medvedev said, among other things.
Both leaders said the agreement -- which replaces the START document that expired in December -- maintains a balance of interest between Russia and the United States.
"This is a win-win situation," Medvedev said through a translator. "No one stands to lose in this agreement. Both parties won ... the entire world community won."
The new treaty is an important step forward, but "it is just one step on a longer journey ... (and) will set the stage for further cuts," Obama said. "And going forward, we hope to pursue discussions with Russia on reducing both our strategic and tactical weapons, including non-deployed weapons."
Both leaders discussed Iran and its nuclear program, which Western leaders fear is to develop nuclear weapons.
Obama said the new START document signaled U.S.-Russian leadership in non-proliferation of nuclear weapons that sends a message to Iran's leaders that they have a responsibility to the international community.
Obama said the United States and Russia were part of a coalition of nations insisting Iranian leaders "face consequences, because they have continually failed to meet their obligations." The coalition was working at the U.N. Security Council to pass sanctions against Iran.
"And we will not tolerate actions that flout the (nuclear non-proliferation treaty), risk an arms race in a vital region and threaten the credibility of the international community and our collective security," Obama said.
Noting that Iran hasn't responded to different proposals, Medvedev said, "We cannot turn a blind eye to this."
Sanctions "should be smart" and work with other measures "to avoid a human catastrophe for the Iranian people," he said.