'As a leader, he was always candid and had the courage of his convictions,' Obama said in a statement.
'One of those convictions was his steadfast and passionate belief in the importance of the U.S.-Saudi relationship as a force for stability and security in the Middle East and beyond.
'The closeness and strength of the partnership between our two countries is part of King Abdullah's legacy.'
Obama said that as the two allies 'worked together to confront many challenges, I always valued King Abdullah's perspective and appreciated our genuine and warm friendship'.
Obama praised the 90-year-old for taking 'bold steps' in advancing the Arab Peace Initiative and credited the king for his dedication to education among his people and national outreach.
A statement released by the new king read: 'His Highness Salman bin Abdulaziz Al Saud and all members of the family and the nation mourn the Custodian of the Two Holy Mosques King Abdullah bin Abdulaziz, who passed away at exactly 1am this morning.'
One of his last decisions is thought to have been referring the case of Raif Badawi, the Saudi blogger who has been sentenced to 1,000 lashes, to the High Court last week.
Abdullah - who fathered 22 children with about a dozen wives - had ruled Saudi Arabia as king since 2005, but had run the country as de facto regent for a decade before that after his predecessor King Fahd suffered a debilitating stroke.
New King Salman has been crown prince and defense minister since 2012. He was governor of Riyadh province for five decades before that.
By immediately appointing Muqrin as his heir, subject to the approval of a family Allegiance Council, Salman has moved to avert widespread speculation about the immediate path of the royal succession in the world's top oil exporter.
However, King Salman has already had at least one stroke, leading to concerns that his ill-health could mean that he was not a fit candidate for the role.
King Salman - who is now at the head of the world's top oil producing country - has recently taken over the ailing monarch's responsibilities.
He is a reputed moderate with a deft understanding of the competing demands of conservative clerics, powerful tribes and an increasingly youthful population.
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