Watch video report from VOA's Carolyn Presutti.
Speaking to reporters Wednesday in Estonia, Obama said those who killed Steven Sotloff have failed in whatever they are trying to achieve because the United States and the world are "repulsed by their barbarism" and will not be intimidated.
"Their horrific acts only unite us as a country and stiffen our resolve to take the fight against these terrorists. And those who make the mistake of harming Americans will learn that we will not forget, and that our reach is long, and that justice will be served," said Obama.
National Security Council spokeswoman Caitlin Hayden said U.S. intelligence agencies analyzed the video showing the killing of Sotloff and judged it to be real.
The extremist Islamic State group released the video Tuesday in which a black-masked militant with a British accent addresses Obama and claims Sotloff's death is retaliation for U.S. airstrikes against the group in Iraq.
In a speech earlier Wednesday, United Nations Secretary-General Ban Ki-moon condemned the beheading and other "brutal killings" of civilians by the militants.
"This is totally unacceptable, such kind of inhuman, brutal crimes, which is a crime against humanity. Those perpetrators must be brought to justice. And this is the firm policy of the United Nations," said Ban.
The militant speaking in the video also threatened the life of British hostage David Cawthorne Haines.
British Prime Minister David Cameron called Sotloff's murder "disgusting and despicable."
Islamic State militants beheaded another U.S. journalist last month, James Foley, and also posted the gruesome murder on the Internet.
A Sotloff family spokesman said it is aware of the video and is grieving privately.
After the Foley killing, Sotloff's mother, Shirley, appealed directly to Islamic State leader Abu Bakr al-Baghdadi to free her son. She said he should not pay the price for U.S. policies in Iraq.
The United States has been conducting airstrikes against the Islamic State in coordination with Iraq's government since early August.
Sotloff was taken captive in Syria in August 2013, about a year after Foley was taken hostage. He worked for Time and Foreign Policy magazines.
Pentagon spokesman John Kirby said Tuesday the U.S. will continue airstrikes to disrupt Islamic State's ability to put U.S. personnel and facilities at risk. He said the airstrikes also will support humanitarian aid to those persecuted by the extremists.
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