Obama has been under pressure to keep his promise from the 2008 presidential campaign to overhaul immigration rules.
A tough new law in Arizona has brought the issue to the forefront of public debate and galvanized Hispanic voters, a key group whose support Obama's Democrats need in November congressional elections.
The president addressed the issue at a White House event to mark Cinco de Mayo celebrations honoring Mexican culture and heritage.
"The way to fix our broken immigration system is through common-sense, comprehensive immigration reform," he said.
"I want to begin work this year, and I want Democrats and Republicans to work with me -- because we've got to stay true to who we are, a nation of laws and a nation of immigrants."
Obama's comments seemed aimed at damping hopes an immigration bill would make it through Congress and become law this year.
Democrats have unveiled a framework for reforming immigration rules, which Obama has welcomed, but it is unclear whether the 100-member Senate has the 60 votes needed to pass the bill.
"Make no mistake, our immigration system is broken. And after so many years in which Washington has failed to meet its responsibilities, Americans are right to be frustrated, including folks along border states," Obama said.
"But the answer isn't to undermine fundamental principles that define us as a nation. We can't start singling out people because of who they look like, or how they talk, or how they dress," he said.
The Arizona law requires state and local police to determine if people are in the country illegally, previously a function carried out by U.S. federal immigration police and some local forces.
Critics of the law argue it is unconstitutional and a mandate for racial profiling, and fear it will destroy trust between Hispanic communities and law enforcement in the border state.
Supporters say the law is needed to curb crime in Arizona, home to some 460,000 illegal immigrants and a major corridor for drug and migrant smugglers from Mexico.
"I've instructed my administration to closely monitor the new law in Arizona, to examine the civil rights and other implications that it may have," Obama said. "That's why we have to close the door on this kind of misconceived action by meeting our obligations here in Washington."open your eye
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