Obama rocketed from political obscurity to become the first black to win the presidential nomination of a major U.S. party. The Illinois senator on Tuesday locked up the 2,118 delegates he needs for victory at the August convention.
Rival Hillary Clinton, the former first lady who entered the race 17 months ago as a heavy favourite, did not concede and said she would consult with party leaders and supporters to determine her next move.
Obama will be crowned the Democratic nominee at the convention in August and will face McCain in November's election to choose a successor to President George W. Bush.
"Tonight, we mark the end of one historic journey with the beginning of another," Obama told a victory celebration in St. Paul, Minnesota, at the site of the Republican convention in September.
"Tonight, I can stand before you and say that I will be the Democratic nominee for president of the United States," he told 17,000 cheering supporters. Another 15,000 gathered outside the arena.
Clinton told New York members of Congress she would be open to becoming Obama's vice presidential running mate, and her backers turned up the pressure on Obama to pick her as his No. 2.
The win by Obama, son of a black Kenyan father and white mother from Kansas, marked a milestone in U.S. history. It came 45 years after the height of the civil rights movement.
It followed one of the closest and longest nomination fights in recent U.S. political history. Clinton, who would have been the first woman nominee in U.S. political history, won more than 1,900 delegates.
Obama clinched the win after a wave of more than 70 uncommitted delegates announced their support on Tuesday, pushing his total to 2,156, according to MSNBC count.
Five months of state-by-state delegate selection concluded on Tuesday with Obama winning Montana and Clinton capturing South Dakota.
More party leaders and uncommitted officials are expected to back Obama on Wednesday as the party tries to rally around the nominee for what promises to be a tough election campaign with McCain.
"I am committed to uniting our party so we can move forward stronger and more ready than ever to take back the White House in November," Clinton told a cheering crowd of supporters in New York City. But she made no public overtures to Obama.
