The two leaders spent most of their meeting at the Peace Palace discussing human rights, said Ben Rhodes, U.S. deputy national security adviser.
Rhodes, who agreed with the characterization the meeting was "tense," said Obama began the meeting "by expressing that his trip to Burma [now known as Myanmar] demonstrated the positive benefits that flow from countries moving down the path of political reform and increasing respect for human rights."
Obama highlighted the need for fair and free elections in Cambodia, as well as the need for the release of political prisoners, highlighting the case of a radio broadcaster sentenced to prison for something he said on-air, Rhodes told reporters.
"He said that those types of issues are an impediment to the United States and Cambodia developing a deeper bilateral relationship," Rhodes said of Obama's discussions with Hun Sen.
After the meeting Obama joined other regional leaders for the U.S.-ASEAN summit. ASEAN, or the Association of Southeast Asian Nations, is a 10-nation group that includes Myanmar and Thailand.
Cambodia is the final leg of Obama's three-country tour that started in Thailand then progressed to Myanmar.
In Yangon, Myanmar, Obama said the road to democracy is marked by challenges but what is happening in Myanmar is an example for the world.
"I stand here with confidence that something is happening in this country that cannot be reversed, and the will of the people can lift up this nation and set a great example for the world," Obama, the first U.S. president to visit Myanmar, told about 1,500 people at the University of Yangon. "And you will have in the United States of America a partner on that long journey."
He spoke of the "dramatic transition" that began 18 months ago after Myanmar held popular elections after being ruled by a military junta for decades.
"Under President Thein Sein, the desire for change has been met by an agenda for reform," Obama said, including a civilian-led government, prisoners of conscience released and the once-banned National League for Democracy standing in an election in which once-jailed dissident and political activist Aung San Suu Kyi was elected.
"So today, I've come to keep my promise and extend the hand of friendship," Obama said. "America now has an ambassador in [Yangon, formerly Rangoon], sanctions have been eased and we will help rebuild an economy that can offer opportunity for its people, and serve as an engine of growth for the world."
"But this remarkable journey has just begun, and has much further to go," he said. "The flickers of progress that we have seen must not be extinguished -- they must be strengthened; they must become a shining North Star for all this nation's people."
While in Myanmar, Obama met with activist Aung San Suu Kyi, an opposition lawmaker who was under house arrest for nearly 16 years before her release. Her party, the National League for Democracy, had been outlawed before being allowed to stand for elections. Suu Kyi won the Nobel Peace Prize while under house arrest.
Obama had bilateral discussions with Thein Sein, saying afterward "[We] think a process of democratic and economic reform here in Myanmar that has been begun by the president is one that can lead to incredible development opportunities."
He said he shared with Thein Sein the U.S. belief the process of reform is one that will move the country toward fulfilling "the incredible potential of this beautiful country," adding he looked forward to the visit and hoped to return "sometime in the future."
Speaking in Burmese, Thein Sein said while the past two decades had seen "some disappointments and obstacles in our diplomatic relations," the work of Obama and U.S. Secretary of State Hillary Clinton have helped bilateral relations to progress. He said he would like to "indicate our commitment to strengthening bilateral relations in the years to come," and that the two leaders had "reached agreements on the development of democracy in Myanmar."