The United States "will not be intimidated" in the fight against Islamic State, President Obama said.
Speaking after the murder of second US journalist Steven Sotloff, President Obama said: "Americans are repulsed by their barbarism. We will not be intimidated".
"Their horrific acts only unite us as a country and stiffen the resolve against these terrorists," President Obama said.
The President said it will "take time" to defeat militants, warning Islamic State posed a very serious threat not just to Iraq but entire region.
However, Mr Obama vowed to target "those who make the mistake of harming Americans".
"Our reach is long and justice will be served," he said.
I've been told at the Nato summit that the intelligence services know exactly who 'Jihadi John' is - or at least are 99.9% certain.
The British aid worker being held by Islamic State is David Haines, a 44-year-old father-of-two from Perth, Scotland.
In a video statement which claims to record his final words US hostage and journalist Steven Sotloff blames US foreign policy for his death.