Rice would take over as the new National Security Advisor, replacing Donilon in early July.
Praising Donilon's role the US foreign policy and national security, Obama said he has played a critical role in bolstering the enduring pillars of American power by strengthening alliances from Europe to Asia, enhancing relationship with key powers and moving ahead with new trade agreements and energy partnerships.
Obama specially praised Donilon's help in renewing American leadership in the Asia Pacific.
"He has worked tirelessly to forge a constructive relationship with China that advances our interests and our values," he said.
Donilon, who recently returned from China, will join Obama in his meeting with the Chinese President Xi Jinping in California, starting tomorrow.
"Mr President, to serve in this capacity where we've had the opportunity to protect and defend the United States, to improve the position of the United States in the world, has been the privilege of a lifetime," he said.
"To serve during your presidency, however, is to serve during one of the defining moments in our nation's history. This is because of your vision, your principled leadership, your commitment to defending our interests and upholding our ideals," Donilon said.
"Those many hours of meetings and briefings have given me the opportunity to see you as few people do: behind closed doors, away from the cameras, when a leader's character is revealed," he added.
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