Suu Kyi voices caution on Myanmar reforms
"The most difficult time in any transition is when we think that success is in sight," she said at her lakeside home alongside Obama. "We have to be very careful that we're not lured by the mirage of success."
Obama said the goal of his trip was "to sustain the momentum for democratisation".
"That includes building credible government institutions, establishing rule of law, ending ethnic conflicts and ensuring that the people of this country have access to greater education, health care and economic opportunity," he said.
"I want to make a pledge to the people of this country that I am confident we can keep, and that is, if we see continued progress towards reform our bilateral ties will grow stronger and we will do everything we can to help ensure success."
Obama arrived by limousine for talks with his fellow Nobel Peace Prize winner at the lakeside villa that was her prison for decades under the former junta.
Suu Kyi, dressed in a traditional sarong-style skirt, greeted Obama who clasped his hands together as the pair approached each other with a small bow and shook hands.
They were joined by US Secretary of State Hillary Clinton, who shared a warm embrace with Suu Kyi, and other senior US officials.
The once-dilapidated villa has been spruced up since the veteran dissident's release from house arrest in November 2010, just days after a controversial election swept by the military's political allies.
Now she regularly welcomes visiting dignitaries and foreign media there, and the White House press corps set up their equipment in the garden today.