In a speech at the University of Illinois at Urbana-Champaign, Mr Obama said Americans were living in “dangerous times”, urging Democrats to vote in November midterm elections to restore “honesty and decency and lawfulness” to government.
“Just a glance at recent headlines should tell you this moment really is different,” Mr Obama said.
“The stakes really are higher. The consequences of any of us sitting on the sidelines are more dire.”
He later added: “This is not normal.”
Mr Obama acknowledged his sharp critique of Trump was something of a departure from tradition, noting the history of former presidents avoiding the rough and tumble of politics.
But he said the political moment required a pushback and called for better discourse.
“Appealing to tribe, appealing to fear, pitting one group against another, telling people that order and security will be restored if it weren’t for those who don’t look like us or don’t sound like us or don’t pray like we do — that’s an old playbook,” he said.
“It’s as old as time. And in a healthy democracy, it doesn’t work.
“Our antibodies kick in and people of good will from across the political spectrum call out the bigots and the fear mongers and work to compromise and get things done and promote the better angels of our nation.”
But, Mr Obama added, when there is a vacuum in democracy, “other voices fill the void. A politics of fear and resentment and retrenchment takes hold”.
“It did not start with Donald Trump,” Mr Obama said.
“He is a symptom, not the cause. He’s just capitalising on resentments that politicians have been fanning for years.”
Obama criticises Justice Department pressuring
Mr Obama condemned Mr Trump’s pressuring of law enforcement officials, including Attorney-General Jeff Sessions.
The President has repeatedly called on Mr Sessions to fire special counsel Robert Mueller and earlier this week blamed the Justice Department for indicting two incumbent Republican members of Congress, arguing the moves could jeopardise their seats.
“It should not be a partisan issue to say that we do not pressure the Attorney-General or the FBI to use the criminal justice system as a cudgel to punish our political opponents,” Mr Obama said.
“Or to explicitly call on the Attorney-General to protect members of our own party from prosecution because an election happens to be coming up. I’m not making that up. That’s not hypothetical.”
He also criticised Mr Trump’s response to the violence last year at a white nationalist rally in Charlottesville, Virginia, that resulted in the death of one person.
“We’re supposed to stand up to discrimination,” Mr Obama said. “And we’re sure as heck supposed to stand up clearly and unequivocally to Nazi sympathisers.”
“How hard can that be, saying that Nazis are bad?”
Trump says he ‘fell asleep’ watching Obama’s speech
Mr Trump, meanwhile, claims he fell asleep watching Mr Obama’s speech.
“I’m sorry, I watched it, but I fell asleep,” Mr Trump said at a campaign appearance in Fargo, North Dakota.
“I found he’s very good for sleeping.”
Mr Trump said Mr Obama was trying to take credit for this “incredible thing that’s happening to our country”.
As Mr Obama spoke, Mr Trump told reporters aboard Air Force One that he believed Mr Sessions should investigate the identity of the author of an anonymous New York Times opinion piece that was sharply critical of his leadership, saying the essay was a “national security issue”.
Mr Obama, reacting to the article, said “that’s not how our democracy is supposed to work”.
“The claim that everything will turn out OK because there are people inside the White House who secretly aren’t following the president’s orders, that is not a check,” he said.
“I’m being serious here. That’s not how our democracy is supposed to work. These people aren’t elected. They’re not accountable.”
Obama and Trump at odds over economic recovery
Mr Obama also jabbed Mr Trump on the issue the current President frequently heralds as one of his greatest achievements: the strong economy.
Mr Obama reminded the audience that the economic recovery began during his administration and defended his handling of the 2008 economic collapse.
“When you hear how great the economy’s doing right now, let’s just remember when this recovery started,” he said.
The speech was a preview of the argument that Mr Obama is likely to make until the US midterm elections in November.
Republicans say voters will not find Mr Obama’s argument appealing.
“In 2016, voters rejected president Obama’s policies and his dismissiveness towards half the country,” Republican National Committee spokesman Michael Ahrens said in response to Mr Obama’s speech.
“Doubling down on that strategy won’t work in 2018 either.”
‘If it does happen, it’s your fault’
The November elections have been seen as a referendum on Mr Trump, who has fulfilled campaign promises to cut taxes and regulations but who faces a widening special counsel probe and growing questions about his fitness for office, even by some within his administration.
If Democrats won control of one or both chambers in Congress in November, they would be able not just to stymie Mr Trump’s agenda but to launch investigations into the Trump administration.
Mr Trump told supporters in Montana on Thursday that Republicans needed to maintain control of Congress to stave off possible impeachment proceedings against him.
“If it does happen, it’s your fault, because you didn’t go out to vote. OK?
“You didn’t go out to vote. You didn’t go out to vote. That’s the only way it could happen.”