"I'd never met Nipsey Hussle, but I'd heard some of his music through my daughters, and after his passing, I had the chance to learn more about his transformation and his community work," he said in a letter at his memorial service here.
"While most folks look at the Crenshaw neighbourhood where he grew up and see only gangs, bullets and despair, Nipsey saw potential. He saw hope. He saw a community that, even through its flaws, taught him to always keep going," Obama wrote in a letter.
The letter was read out by Hussle's friend Karen Civil during the public memorial service on Thursday.
Praising the "Double up" rapper, Obama said Hussle had lifted the "Eritrean-American community to set an example for young people to follow - is a legacy worth of celebration".
"I hope his memory inspires more good work in Crenshaw and communities like it," he added.
Hussle was shot dead earlier this month while standing outside his store in South Los Angeles with two other men. He was 33.