"We have been very clear to the Assad regime, but also to other players on the ground, that a red line for us is we start seeing a whole bunch of chemical weapons moving around or being utilized," Obama said during a news conference.
"That would change my calculus. That would change my equation."
Analysts said Obama's remarks were his most direct warning of U.S. intervention in Syria, where Assad's military is fighting a nearly 18-month-old rebellion.
An administration official told The Washington Post Obama did not intend to suggest a change in policy with his remarks, saying the administration would prefer to avoid military intervention.
But "there's a deterrent effect in making clear how seriously we take the use of chemical weapons or giving them to some proxy force," the unidentified official said.
A senior administration official told The Wall Street Journal the deterrent included dissuading Assad from providing the weapons to outside groups, including Lebanon-based Hezbollah Shiite Islamist militant group and political party.
Washington classifies Hezbollah as a terrorist organization.
Obama told the national convention of the Veterans of Foreign Wars in Reno, Nev., July 23 Assad would be "held accountable by the international community" if he made the "tragic mistake" of using chemical weapons.
U.S. intelligence services allege Syria has major stockpiles of extremely toxic nerve agents including mustard gas, VX and Sarin gas and the missile and artillery systems to deliver them.
The nerve agents are classified as weapons of mass destruction by the U.N. Security Council.
"We cannot have a situation in which chemical or biological weapons are falling into the hands of the wrong people," Obama said in an impromptu appearance in the White House briefing room.
"We have put together a range of contingency plans. We have communicated in no uncertain terms with every player in the region that that's a red line for us," he said.
U.S. officials said July 13 they had unspecified evidence Assad forces had moved some parts of the chemical weapons stockpile out of storage, but such movement was never confirmed.
Obama did not say Monday his administration had any new evidence, but he said that given the volatility of the Syrian crisis, he was not confident the Assad regime would not try to deploy these weapons.
"The international community has sent a clear message that rather than drag his country into civil war he should move in the direction of a political transition," Obama said. "But at this point, the likelihood of a soft landing seems pretty distant.
Assad and other members of his regime have said the weapons would not be used except in the case of foreign intervention -- a threat widely interpreted as an attempt to deter a Western attack.
The regime had no immediate response to Obama's Monday remarks.