He vetoed the bill that called for the 1,179-mile pipeline's construction to transport crude oil from Canada to the Texas Gulf Coast.
The House of Representatives passed the bill with a vote of 270-152 earlier this month, and the Senate passed it with a vote of 62-36 in January. Neither vote was strong enough to overcome a presidential veto.
The bill "attempts to circumvent longstanding and proven processes for determining whether or not building and operating a cross-border pipeline serves the national interest," Obama said in his veto message.
"Because this act of Congress conflicts with established executive branch procedures and cuts short thorough consideration of issues that could bear on our national interest -- including our security, safety, and environment -- it has earned my veto," Obama added.
The project, had the bill been signed by Obama, would have cost $8 billion. Supporters said it would have created jobs in the United States and reduced the country's dependence on foreign oil.
Very disappointed to learn President Obama has vetoed the bi-partisan XL Keystone Pipeline bill. It's a veto of American jobs. #KeystoneXL— Rep. Robert Aderholt (@Robert_Aderholt) February 24, 2015
House Speaker John Boehner, R-Ohio, called the veto a "national embarrassment."
"It's embarrassing when Russia and China are plowing ahead on two massive pipelines and we can't get this one no-brainer of a project off the ground," he said in a statement. "The president is just too close to environmental extremists to stand up for America's workers. He's too invested in left-fringe politics to do what presidents are called on to do, and that's put the national interest first."
Other lawmakers showed support for Obama's decision.
Building #KeystoneXL pipeline risks our land, air & water for profits that will be mostly exported. I applaud the president's veto.— Rep. Keith Ellison (@keithellison) February 24, 2015
Canadian Minister of Natural Resources Greg Rickford issued a statement Tuesday afternoon expressing his continued support for the project.
"This is not a debate between Canada and the U.S.; it's a debate between the president and the American people, who are supportive of the project," he said. "It is not a question of if this project will be approved; it is a matter of when. We will continue to strongly advocate for this job creating project. Keystone XL will create jobs for Canadian and American workers and strengthen energy security in North America. The state department itself has indicated it can be developed in an environmentally sustainable manner."