Peres, speaking softly, told the luminaries gathered for the White House dinner honoring him that he would always cherish the medal.
The 88-year-old Israeli leader called Obama a great friend to Israel and applauded him for "working hard" to pull together a coalition to pressure Iran to abandon its nuclear weapons ambitions.
He said the Iranian threat must be stopped and Israel appreciates Obama making it "clear that all options are on the table."
"You have pledged a lasting friendship for Israel," he said. "So you pledged, so you act, so you are acting."
Obama cited Peres for his "indomitable spirit" and said the Israeli leader "teaches us to never settle for the world as it is."
"The United States is fortunate to have many allies and partners around the world," Obama said in prepared remarks before the White House event. "Of course, one of our strongest allies, and one of our closest friends, is the state of Israel. And no individual has done so much over so many years to build our alliance and bring our two nations closer as the leader we honor tonight -- our friend, Shimon Peres. …
"In him we see the essence of Israel itself -- an indomitable spirit that will not be denied.
"Shimon knows the necessity of strength. As [first Israeli Prime Minister David] Ben-Gurion said, 'An Israel capable of defending herself -- which cannot be destroyed -- can bring peace nearer.' And so he's worked with every American president since John F. Kennedy. And it's why I've worked with Prime Minister [Binyamin] Netanyahu to ensure that the security cooperation between the United States and Israel is closer and stronger than it has ever been. Because the security of the state of Israel is non-negotiable. And the bonds between us are unbreakable.
"And yet, Shimon knows that a nation's security depends, not just on the strength of its arms, but upon the righteousness of its deeds -- its moral compass. He knows, as Scripture teaches, that we must not only seek peace, we must pursue it. And so it has been the cause of his life -- peace, security and dignity, for Israelis and Palestinians and all Israel's Arab neighbors," Obama said.
Former President Bill Clinton and Secretary of State Hillary Clinton were late arrivals at the ceremony, entering seconds after Obama presented Peres with the medal. Obama acknowledged them as "two people who constantly sought to achieve peace."
2014: The Year in Music [PHOTOS]