"We are now in contact with the Libyan government, and want to make sure that if in fact this transfer has taken place, that he's not welcomed back in some way, but instead should be under house arrest," Obama said in a radio interview as Megrahi reached his home in Libya.
Expressing his displeasure over the release of Megrahi by the Scottish Government, Obama said his administration has been in contact with them indicating that the US would object to this. "We thought it was a mistake," he said.
"We have also obviously been in contact with the families of the Pan Am victims, and indicated to them that we don't think this was appropriate," he said.
Later, the White House Press Secretary Robert Gibbs said: "We oppose and deeply regret the decision that has been made for release."
At the State Department, the Assistant Secretary of State for Public Affairs, P J Crowley, said: "In essence, the Scottish minister today said that a convicted terrorist has a right to die at home, and the United States could not disagree more."
Responding to a question, Crowley said: "From the standpoint of the United States, we do not think that justice has been served. We think that justice has been undermined.
We understand compassion, but Pan Am 103 has always been a special case. We all remember the iconic vision of the cockpit of Pan Am 103 resting on the ground in Lockerbie."
Over 12 years, the United States, working with the United Kingdom, working with the international community, worked diligently to prosecute and convict the perpetrator of one of the most heinous crimes of the last 25 years, he said.
The former Libyan intelligence officer was convicted in 2001 of taking part in the bombing on Dec 21, 1988, and sentenced to life in prison for Britain's deadliest terrorist attack.
The airliner exploded over Scotland and all 259 people aboard and 11 on the ground died when it crashed into the town of Lockerbie.
He was sentenced to serve a minimum of 27 years in a Scottish prison. But a 2007 review of his case found grounds for an appeal, and many in Britain believe he is innocent. He served only eight years.
