"I think that it (IS) is very important for us to understand this is a serious challenge. IS is a virulent, nasty organisation that has gained a foothold in ungoverned spaces effectively in Syria and parts of western Iraq," Obama told the National Public Radio in an interview.
Referring to the recent terrorist attacks in Paris and San Bernardino, Obama said they show IS' ability to proselytise for their perverted brand of Islam and spur small-scale attacks.
As a result of actions by the US-led international coalition, IS has lost about 40 per cent of its populated territory in the region, he said.
"Both in terms of homeland security and in terms of our efforts over there, I am confident that we are going to prevail. But it is also important for us to keep things in perspective, and this is not an organisation that can destroy the United States," Obama said.
"The most damage they can do, though, is if they start changing how we live and what our values are, and part of my message over the next 14 months or 13 months that I remain in office is to just make sure that we remember who we are and make sure that our resilience, our values, our unity are maintained. If we do that then IS will be defeated," Obama said.