"The Russians are engaging in a fundamental breach of international law,” said Obama about the military intervention, in remarks to guests at a fundraiser in Virginia.
But the president also offered hope that the situation could be resolved.
"We may be able to de-escalate it," said Obama.
Moscow moved military forces into a heavily Russian-speaking area of Ukraine over the weekend after an interim government in Kiev removed former President Viktor Yanukovych from power.
Yanukovych was close to Russia and international observers see the military intervention as a power play by Russian President Vladimir Putin to reassert control over Ukraine.
Obama has called on Russia to withdraw its forces, saying that they were in breach of international law and that there would be a “cost” for their actions.
On Tuesday night, he said the U.S. was defending the principle that nations should determine their own destiny without coercion from other states.
“Part of what we have to navigate ... around the world is our ability to help countries ... allow people to determine their own destiny," said Obama.
But Putin has refused to budge, insisting that Russia’s military is needed to protect ethnic Russians who are a majority in the region.
On Tuesday, Secretary of State John Kerry visited Kiev to highlight American support for Ukraine. The U.S. offered $1 billion in loan guarantees as well as technical assistance to help Kiev deal with a growing financial crisis and restore stability to the country.
Obama dismissed Russia’s claim of acting to protect civilians in Ukraine earlier Tuesday, saying the international community was united by the “strong belief that Russia’s action is violating international law.”
"President Putin seems to have a different set of lawyers, and making a different set of interpretations, but I don’t think that’s fooling anybody,” said Obama.
The president said he was weighing a host of measures to punish Russia if they failed to pull back, including further diplomatic and economic sanctions.