She opened by saying: "This isn't exactly the party I planned but I sure like the company."
Mrs Clinton thanked the "18 million of you from all walks of life" who voted for her.
She urged supporters to now ensure all their energy and passion was directed towards getting Mr Obama elected.
"Today as I suspend my campaign, I congratulate him on the victory he has won and the extraordinary campaign he has won," Mrs Clinton said.
"I endorse him and throw my full support behind him and I ask of you to join me in working as hard for Barack Obama as you have for me."
In response, Mr Obama said Mrs Clinton had "shattered barriers on behalf of my daughters and women everywhere, who now know that there are no limits to their dreams".
A hard-faced woman - an aggressive woman - is not something America is culturally attuned to liking
Much of Mrs Clinton's speech focused on her fight to be the first woman president of the US.
Although she had not succeeded, she said there were now "18 million cracks in the glass ceiling" preventing a woman from winning the White House.
She said: "Let us resolve and work toward achieving a very simple proposition: there are no acceptable limits, and there are no acceptable prejudices in the 21st Century in our country."
She added: "Children today will grow up taking for granted that an African-American or a woman can, yes, become the president of the United States."
Mrs Clinton told her supporters to: "Aim high, work hard and care deeply about what you believe in."
Aim high, work hard and care deeply about what you believe in
The BBC's Kevin Connolly at the venue says there was an angry feeling among many of her supporters that Mr Obama only won because the complex rules of the Democratic Party process suited his campaign.
Mr Obama won enough delegates to effectively secure the nomination after the final primaries on Tuesday.
Intense speculation remains about who Mr Obama will choose as his running mate.
Mr Obama has announced a team to help him make his selection but has said he will not be rushed.
The BBC's Kim Ghattas in Washington says that although the decision on the running mate is Mr Obama's, Mrs Clinton would also face a tough choice if offered it.
If she does not take it, our correspondent says, it may look as though she is not doing enough for Mr Obama, but if she accepts and Mr Obama loses she may be blamed for the defeat.
Meanwhile the Republicans have launched a "Clinton vs Obama" page on their party website drawing attention to her criticism of Mr Obama during the campaign.
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