Clinton used a nationally televised speech in downtown Washington to praise the party's likely 2008 nominee and urge her backers to work as hard for his election as they had for hers.
In abandoning a campaign she launched more than 17 months ago, Clinton congratulated Obama "on the victory he has won. ... I endorse him and throw my full support behind him."
There were scattered boos at mentions of Obama's name but mainly cheers as Clinton pleaded with the Democratic "family" to "come together" after a "tough fight."
Her remarks appeared to meet, if not exceed, the expectations of Obama's campaign, which is eager to close rifts within the party and attract many of the voters, including women, Hispanics and working-class whites, who tilted strongly to Clinton in the primaries.
Obama, in a statement released by his campaign, said he was "thrilled and honored" to gain Clinton's support and praised her "valiant and historic campaign." He added that he is "a better candidate" for having had to compete against her.
Portions of Clinton's 28-minute speech, delivered in an air-conditioned hall on a sweltering afternoon, were drawn directly from her campaign stump speech. But she departed in one significant respect by addressing feminism, a topic she largely avoided in the campaign.
Her words reflected apparent pride in what she had accomplished and perhaps the belief - though she did not say so directly - that her candidacy had been hampered by sexism.
She said that when asked during the campaign what it meant to be a woman running for president, "I always gave the same answer - that I was proud to be running as a woman, but I was running because I thought I'd be the best president," the familiar line prompting fresh applause from supporters.
"But," she went on, "I am a woman, and like millions of women, I know there are still barriers and biases out there, often unconscious, and I want to build an America that respects and embraces the potential of every last one of us."
She said that "women and men alike" need to understand that women must "enjoy equal opportunities, equal pay and equal respect."
She added that there should be "no acceptable limits" and "no acceptable prejudices in the 21st century in our country."
Some on Clinton's team, including her husband, have complained about a sexist element in the opposition to her campaign and in criticism of her candidacy by some in the news media.
In a line that was likely to encourage supporters in the belief that she has not given up on her ambition to win the White House someday, Clinton said that "we weren't able to shatter that highest, hardest glass ceiling this time." But "thanks to you, it's got about 18 million cracks in it," a reference to the number of votes she received during the primaries, "filling us all with the hope and the sure knowledge that the path will be a little easier next time."
Unlike her speech Tuesday night, which drew criticism for not acknowledging that Obama had won, Clinton advised her supporters that it was time to move beyond the divisions of the primary fight.
Her endorsement of Obama was both extensive and strongly delivered.
"Life is too short, time is too precious and the stakes are too high to dwell on what might have been. We have to work together for what still can be. And that is why I will work my heart out to make sure that Senator Obama is our next president," she said. "I hope and pray that all of you will join me in that effort."
The New York senator is being pushed by her supporters for the second spot on the Democratic ticket. Obama has said she would be on anyone's short list for vice president, but his aides have sought to discourage speculation that she would be picked.
Clinton and Obama met privately for an hour Thursday night at the Washington home of California Sen. Dianne Feinstein, but there are no indications that they discussed the vice presidency.
Obama's ability to attract Clinton's supporters, some of whom have told pollsters they would defect to John McCain in the fall, is considered essential to his chances of winning the general election.
Clinton's argument on Obama's behalf combined both the personal and the substantive. As she has before, she linked her attempt to make a breakthrough for women to his pathbreaking effort as an African-American candidate.
She also pointed to issues, such as the economy, global warming and the war in Iraq, as reasons why "we need to help elect Barack Obama our president."
Echoing her former rival's campaign slogan, she said she shared Obama's optimism and "so today I am standing with Senator Obama to say, 'Yes, we can!' "
At the same time, Clinton made it clear that she has no intention of surrendering her place at the center of the national stage, particularly on issues such as universal health care.
She also alluded briefly to another of the tasks ahead: repairing the damage to her husband's reputation, which took a beating during the campaign. Clinton hailed the "tremendous progress" during his presidency "with a flourishing economy and our leadership for peace and security respected around the world."
The former president joined Mrs. Clinton, along with their daughter, Chelsea, and Dorothy Rodham, Mrs. Clinton's 89-year-old mother, at the event, but he left the stage before she began speaking.
For her much-anticipated concession speech, Clinton chose one of Washington's grandest spaces: the ornate Great Hall of the National Building Museum, built in the 1880s as the U.S. Pension Bureau and modeled on an Italian palazzo, with a 300-foot ceiling and soaring classical columns. Among the events regularly held at the site are presidential inaugural balls.
Several thousand supporters, campaign aides and prominent Clinton backers were on hand, including Maryland Sen. Barbara A. Mikulski, one of her national campaign co-chairs.
In a statement, Mikulski endorsed Obama and said she would vote for him at the national convention in Denver.
Clinton's other top supporter in the state, Gov. Martin O'Malley, also released a statement endorsing Obama.
"She emerges from the contest with a very large, extensive and intensely loyal following," said Ann Lewis, a longtime Clinton aide. "She has established herself as a driving force in the Democratic debate, especially on universal health care, and she is the woman who shattered the remaining precondition about what a woman could do in politics."
In her speech, Clinton said she was suspending her candidacy, a legal step that defeated candidates routinely take to wind down their organization and retire any debt.
Her long run, which attracted more than $200 million in contributions, left a debt estimated at close to $30 million, as Clinton tried in vain to match Obama's haul. Much of the debt, if not most of it, is owed to Clinton, who lent more than $11 million to the campaign.
Clinton left the race on the same day of the week that she entered it, a Saturday, not normally the occasion for a major political event. Though it had been evident for years that she would run, the timing of her announcement, on Jan. 20, 2007, was a surprise, as was the vehicle she used: an online video.
"I'm in, and I'm in to win," she said that day on her Web site, which featured an informal video of Clinton at her Washington home.
The message seemed to be that Clinton, a survivor of 1990s politics who remade herself as the only first lady to win election to the Senate, was prepared to use the latest tools to gain the presidency.
But it was a newcomer, Obama, who had entered the race four days earlier, and who harnessed the power of a wired nation to generate more campaign cash than anyone in history and create a grass-roots organization that overtook the Clinton machine.
Clinton finished more than 200 delegates behind but boasted that she won the popular votes, with more votes than any primary candidate in history.
Neutral analysts dismissed that claim, because it included votes from the Michigan primary, which did not count and where Obama did not compete, and also did not include estimates of Democratic caucus turnout.
Beyond dispute, however, was that Clinton had received more than 17.7 million votes, came closer than any Democratic runner-up in the modern primary era and ran a stronger race than any woman candidate in history.
She has four years remaining on her Senate term.