Thein Sein's leadership has allowed a thaw in relations because he has helped move the country, formerly known as Burma, "down a path of both political and economic reform," Obama said during an appearance with Thein Sein in Washington.
Obama said lifting of sanctions by the United States against Myanmar inspired other countries to do the same, which has spurred broad-based economic development, including the prospect of trade and investment in Myanmar which can produce jobs and higher standards of living.
Washington imposed sanctions against Myanmar's military junta for its poor human rights record.
"Over the last two years we have seen a sustained process in which political prisoners, including Aung San Suu Kyi, have been released and have been incorporated into the political process," Obama said. "We very much appreciate your efforts and leadership in leading Myanmar in a new direction."
Thein Sein, noting it was his first visit to Washington, said through an interpreter, "We are very pleased that our relationship has improved significantly."
While a lot of progress has been made, "our democratic government is just 2 years old," he said, adding that a high poverty rate and a small middle class means Myanmar has "a lot of challenges ahead ..."
Obama said the two leaders discussed next steps, including Thein Sein outlining the release of more political prisoners and ensuring the Myanmar government institutionalizes some of the political reforms that already have occurred.
Obama said he shared with the Myanmar leader his concerns about violence directed toward Muslim communities and how that violence must end. He said the United States was prepared to work with Myanmar and the international community to ensure that those displaced by the violence receive the help they need as well as ensuring their rights are recognized.
The leaders also discussed the U.S. Agency for International Development evaluation of improving agricultural productivity in Myanmar, and working to build roads between major cities.
The United States has been a prime mover in urging Thein Sein to introduce reforms after five decades of repressive military rule ended when he became the elected head of state in March 2011.
Thein Sein, 68, is the first head of state from Myanmar to visit the White House in almost 47 years. Obama became the first sitting U.S. president to visit the Southeast Asian country when he visited Yangon in November.
Thein Sein, a former Myanmar military commander considered by some a moderate and reformist, undertook a series of political reforms as president, including some deregulation of the country's censored media, releasing nearly 900 political prisoners and halting the country's controversial Chinese-led hydropower project.
Washington followed by easing sanctions.
The reduction in social controls has been followed by an increase in sectarian and ethnic tensions. In western Myanmar during the past year, Buddhists have led attacks on a Muslim ethnic group, the Rohingya, and mosques and houses have been destroyed.
In March Thein Sein said he would use force if necessary to stop the religious rioting. He said use of force would be a "last resort to protect the lives and safeguard the property of the general public."