"We've made progress. For years, the international community has had concerns that Iran's nuclear programme could lead to Iran acquiring a nuclear weapon, which would be a threat to the region and to the world. Under the initial agreement we reached in November, the Iranian government has agreed to limit key parts of its nuclear programme," Obama said in a Nowruz message to the people of Iran.
"As I've said before, I'm under no illusions. This will be difficult. But I'm committed to diplomacy because I believe there is the basis for a practical solution. Iran's highest officials, including Supreme Leader (Ali) Khamenei, have said that Iran is not developing nuclear weapons," Obama said.
"So there is a chance to reach an agreement if Iran takes meaningful and verifiable steps to assure the world that its nuclear programme is for peaceful purposes only. Iran would have access to peaceful nuclear energy. And we will have addressed peacefully, and with diplomacy, one of the greatest challenges to international peace and security," he said.
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"Since taking office, I've offered the Iranian government an opportunity - if it meets its international obligations, then there could be a new relationship between our two countries, and Iran could begin to return to its rightful place among the community of nations," he said.
Referring to his talk with his Iranian counterpart last year, the first by a US President since 1979, Obama said he told him the two leaders can address the serious disagreements between the two governments, reduce distrust and begin to move beyond their difficult history.
"If Iran meets its international obligations, we know where the path of dialogue and greater trust and cooperation can lead. It will mean more opportunities for Iranians to trade and forge ties with the rest of the world," he said.
"It means more economic growth and jobs for Iranians, especially young Iranians who dream of making their mark in the world. It will mean more opportunities for Iranian students to travel abroad and build new partnerships that help you realise your incredible potential.