As he spoke, South Korea warned they may shoot down parts of a North Korean rocket if they fell over South Korean territory.
Next month, North Korea is set to launch a satellite, using the same technology that could fire a long range nuclear missile. The Obama administration views the launch as a cover for nuclear missile development.
"There will be no rewards for provocations. Those days are over. Today we say, 'Pyongyang, have the courage to pursue peace and give a better life to the people of North Korea,'" said Mr. Obama.
The White House urged Chinese President Hu Jintao to use his country's influence over North Korea to push the north to meet its international obligations.
Meanwhile, a Chinese government-backed disarmament expert said allowing the launch to dominate discussions at the summit may be exactly what North Korea wants.
"I think North Korea did this to overshadow our talks about nuclear security," said China Arms Control and Disarmament Association head Li Hong. "We shouldn't fall for their trick."
North Korea has a history of angling for food, oil and other concessions in exchange for disarmament pledges in on-again, off-again talks, and it periodically launches aggressive, attention-grabbing moves to ensure those negotiations stay high on the international agenda.
Why Pyongyang made its rocket announcement so soon after settling a nuclear moratorium in exchange for aid last month with the U.S. remains unclear.
The drama over North Korea's satellite launch plans robbed attention from the summit's moves to lock down the world's supply of nuclear material by 2014.
The Associated Press contributed to this report.