"Michelle - for the past twenty-five years, you've been not only my wife and mother of my children, but my best friend," Obama said in front of thousands of his supporters with the First Lady sitting in the front row along with her youngest daughter Malia and her mother in their hometown.
The 52-year-old First Lady received standing ovation as Obama thanked her.
"And a new generation sets its sights higher because it has you as a role model. You've made me proud. You've made the country proud," said the 55-year-old outgoing US President about his life partner for 25 years.
He also thanked his daughters Sasha and Malia.
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"Malia and Sasha, under the strangest of circumstances, you have become two amazing young women, smart and beautiful, but more importantly, kind and thoughtful and full of passion," he said.
Malia was seen frequently trying to stop tears flowing down her cheeks.
Interestingly, while Michelle and her daughter Malia were there to hear Obama's emotional farewell speech, his youngest daughter Sasha was not present as her school reportedly did not allow her to attend the event as she had an examination on the next day.
Later, Michelle shared a touching family photo.
In perhaps one of the earliest photographs of their family during Obama's first presidential campaign, the black and white photograph features Malia and Sasha in white outfits while sitting on their parents' laps.
"To Joe Biden, the scrappy kid from Scranton who became Delaware's favourite son: you were the first choice I made as a nominee, and the best. Not just because you have been a great Vice President, but because in the bargain, I gained a brother," Obama said.
Thanking his staff, Obama said for eight years he has drawn from their energy and tried to reflect back what they displayed every day: heart, and character and idealism.
"I've watched you grow up, get married, have kids, and start incredible new journeys of your own. Even when times got tough and frustrating, you never let Washington get the better of you. The only thing that makes me prouder than all the good we've done is the thought of all the remarkable things you'll achieve from here," he said.
"Because yes, you changed the world," Obama said in his final speech as the President of the United States.