The president will still attend the Group of 20 economic summit in St. Petersburg, Russia, but he has no plans to hold one-on-one talks with Putin while there, according to a top White House official.
"Following a careful review begun in July, we have reached the conclusion that there is not enough recent progress in our bilateral agenda with Russia to hold a U.S.-Russia Summit in early September," the White House said in a statement.
It was a rare diplomatic rebuke for the Obama Administration, but it reflects the U.S. anger over Russia's harboring of National Security Agency leaker Edward Snowden and frustration over Mowscow's stubbornness on other key issues like missile defense and human rights.
The move is likely to increase the tension between the U.S. and Russia. The two countries have often been at odds on international issues -- most recently in Syria, where the U.S. accused Putin of helping President Bashar Assad fund a civil war. The U.S. has also been a vocal critic of Russia's crackdown on Kremlin critics and recently sanctioned 18 Russians for human rights violations.
The news came during the president's two-day stay in Southern California. In an appearance on "The Tonight Show," Mr. Obama addressed the tensions with Russia.
"There have been times where they slip back into Cold War thinking, and a Cold War mentality," Mr. Obama told Jay Leno. "What I say to President Putin is that's the past, and we've got to think about the future, and there's no reason why we shouldn't be able to cooperate more effectively than we do."
Then according to White House press secretary Jay Carney, the president had dinner with his longtime friend Jeffrey Katzenberg, the CEO of DreamWorks. The two dined alone at the president's hotel, the Hilton Woodland Hills.
At 10 a.m. Wednesday, Mr. Obama answered questions from homeowners, renters and prospective buyers in a virtual housing roundtable discussion on the website Zillow.
Mr. Obama said he'd save money if he refinanced the mortgage on his Chicago home, but he hasn't jumped on current low interest rates because "when you're president you have to be a little careful about these transactions."
After the Zillow event, the president headed to Camp Pendleton to thank troops and their families for their service. Mr. Obama spoke to a crowd of nearly 3,000 Marines about the progress made in the Middle East.
"We are accomplishing what we set out to do. Because of you, Osama bin Laden is no more," the president said.
Marines we spoke with were happy with the president's message.
"It was awesome that he had time to come and see us," said Cpl. Herman Mendez.
The Associated Press contributed to this report.