"Today we can definitely say the Gadhafi regime has come to an end," Obama said in a statement from the Rose Garden.
He said the National Transitional Council government's announcement of Gadhafi's death "marks the end of a long and painful chapter" in the country.
The council's military chief, Abdul Hakim Belhaj, confirmed Gadhafi died of a gunshot wound to his head in his hometown of Sirte, the Tripoli Post reported. His body was transferred to a hospital in Misurata for medics to confirm the body's identity.
Gadhafi was alive and unharmed when he was captured after National Transitional Council troops took over Sirte Thursday, interim Prime Minister Mahmoud Jibril said. He was wounded in his right arm during a gun battle that broke out as NTC troops tried to put him into a vehicle -- and during further shooting as the vehicle drove off, he was hit in the head.
Gadhafi died before the vehicle could reach a hospital in Misrata, Jibril said.
After more than 40 years of a tyrannical, brutal rule, "the Libyan people rose up and demanded their rights," Obama said.
"This is a momentous day in the history of Libya," Obama said. "The dark shadow … has been lifted."
"We have been waiting for this moment for a long time. Moammar Gadhafi has been killed," Jibril said.
Pan-Arab television station al-Jazeera aired cellphone video of a bloodied, shirtless man who appeared to be Gadhafi lying on the ground. A photograph shown by al-Jazeera also showed an open-eyed seemingly lifeless body of a man identified as Gadhafi.
The NTC also reported Gadhafi's son, Saif Gadhafi, was killed, but provided no details, CNN said.
Al-Arabiya showed image it said was another Gadhafi son, Mutassim Gadhafi, who reportedly died in the fighting involving his father.
Gadhafi's son Saif and Defense Minister Aboubakre Younis Jabr were killed by rebels near Sirte, the Tripoli Post reported Thursday. Saif al-Islam, Gadhafi's second son, was wounded in the leg by rebels and transferred to a hospital in Misurata, where he died soon after, the Post said.
National Transitional Council officials said Jabr was killed at the time of Gadhafi's capture.
Three other sons have reportedly fled Libya -- Saadi to Niger and Muhammad and Hannibal to Algeria, along with Gadhafi's second wife, Safiya, the Post said.
There were unconfirmed reports that Gadhafi was wounded when NATO warplanes hit a convoy that included the former despot, The New York Times said.
In a statement issued after the attack, NATO officials said, "At approximately 08.30 local time today, NATO aircraft struck two pro-Gadhafi forces military vehicles which were part of a larger group maneuvering in the vicinity of Sirte."
A NATO spokesman told the Financial Times the military alliance was looking into reports that Gadhafi was part of the convoy.
"We cannot confirm or deny it," the spokesman said.
Ali Aujali, the NTC ambassador to the United States, told CNN he wasn't interested in how Gadhafi was killed, despite the murkiness surrounding the details.
"For me, it is better for him to be killed than captured alive," Aujali said.
News of the former strongman's death came as the NTC claimed Gadhafi's hometown of Sirte had fallen. Car horns tooted and guns fired in celebration in Tripoli and Benghazi, where the rebellion against Gadhafi began in February, as residents rushed into the streets to celebrate, The New York Times reported.
"I cannot express the depth of my happiness," one man told CNN in Tripoli at Martyrs' Square, which once was Green Square, the site of many of Gadhafi's fiery speeches during his four decades of iron-fisted, often cruel, rule. "In the end, the devil is gone."
At U.N. headquarters in New York, Secretary-General Ban Ki-moon spoke of the reports of Gadhafi's death, saying scenes of celebrations and grief would be played out over the next few days.
"Yet let us recognize immediately that this is only the end of the beginning," Ban said. "The road ahead for Libya and its people will be difficult and full of challenges."
When Gadhafi brutalized Libyans after they began protesting his regime earlier this year, the United States, its allies and Arab nations "stopped Gadhafi's forces in their tracks," Obama said.
Obama praised the work of the NATO-led operation that, among other things, closed Libyan airspace and targeted military sites.
Speaking at a town hall meeting in Plymouth, N.H., Vice President Joe Biden said the NATO coalition "got it right. Gadhafi is gone -- one way or another, he is gone."
In this case, America spent $2 billion total and didn't lose a single life, Biden said.
Obama urged Libya's interim government to build an "inclusive and tolerant" new government which would "stand as an ultimate rebuke" to Gadhafi.
He also urged Libyans to work with the international community to secure dangerous materials and respect the rights of all Libyans.
Obama reassured the Libyan people the United States and its allies would help them on their "long and winding road" to democracy.
"You have won your revolution," he said.