While the comments suggest the U.S. could step in militarily if there is a clash over the territory, Obama stressed the need for maritime disputes to be resolved peacefully.
"There's no shift in position. There's no red-line," Obama said, referring to U.S. policy. "At the same time I have said to the prime minister [Shinzo Abe] that it would be a profound mistake to continue to see an escalation around this issue," he added.
Analysts say Obama's trip to Asia is being watched closely in Beijing.
"I suspect that in China, there is great deal of attention being paid not just to the visits, but to exactly what Obama says when he's in these capitals," Sheila Smith, a senior fellow for Japan studies at the Council of Foreign Relations told CNBC Thursday.
"The President is well aware that the Chinese are listening and that he wants to put forward a more constructive image for the bilateral relationship with Japan," she added.
The U.S. and Japan have agreed that negotiations on the Trans-Pacific Partnership (TPP) will continue at a ministerial level, Abe said at the joint news conference.
There had been some expectations that a two-way trade deal would be reached during Obama's Japan visit, paving the way for a broader trans-Pacific trade agreement.
Read MoreObama, Abe under pressure to salvage Pacific trade pact
The trade agreement talks have stalled with Japan seen reluctant to open up farm sectors such as beef. Abe, who has pledged to revive Japan's economy, has said the TPP is key for the revival of Japan's economy.
Obama told the news conference that agreement was close on issues such as autos and agriculture.
Still in a sign of disappointment that a trade pact has yet to be finalized, Japan's blue-chip stock index fell to a one-week low.
"The fact that we haven't got a TPP deal ultimately does impact economic data and new sources of economic growth," said Manpreet Gill, senior investment strategist at Standard Chartered Bank.
"It's tough to draw conclusions for shorter-term investment decisions, but the fact is that investment portfolios are long-term decisions and longer term issues like trade deals do play an impact in that," he said.
Read MoreWatch: Obama's Asia visit is symbolic: Senator
Politics and trade pacts aside, it was Obama's trip to a sushi restaurant with Abe that appeared to be attracting the most attention on social media.
Obama joined Abe on Wednesday at well-known sushi restaurant in Tokyo called Sukiyabashi Jiro, which was profiled in the 2011 documentary film Jiro Dreams of Sushi.