Mr Edwards praised Senator Hillary Clinton's campaign, but said it was time for Democrats to come together. It is a big endorsement for Senator Obama.
The 2004 vice presidential nominee had been heavily courted by both Senator Obama and rival Senator Clinton.
Mr Edwards' campaign focused on the hardships of working-class Americans - precisely the voting group Senator Obama has had trouble reaching.
Last night at an Obama rally in Michigan, Mr Edwards said 'the Democratic voters of America have made their choice and so have I'.
'There is one man who knows in his heart that it is time to create one America, not two, and that man is Barack Obama,' he added.
He praised Senator Clinton and said she was 'made of steel', but urged Democrats to unite against Republican John McCain.
Senator Obama said Mr Edwards' campaign goal of cutting the 37m Americans living in poverty by half would become a central plank of his campaign.
McCain sets out Iraq strategy
Meanwhile, Republican candidate John McCain laid out for the first time a timeline to end the Iraq war, arguing he would get most US troops home by 2013 if elected president.
The Arizona senator said also that al-Qaeda mastermind Osama bin Laden would be captured or killed, and that the threat from the Taliban in Afghanistan would be greatly reduced by the end of his first term in the White House.
Mr McCain's comments appeared to be an effort to neutralize an attack by Democrats who argue he is ready to fight a 100-year war in Iraq, as he limbers up his campaign for November's general election.
The Republican has said he would be happy to see US troops stay for that long in Iraq, but in a non-combat role similar to the US military presence in Germany and South Korea.
By 2013 the US troops still in Iraq would not play a direct combat role, said Mr McCain, who was a staunch supporter of President George W Bush's surge strategy.
Both Democratic candidates have pledged to start bringing combat troops back from Iraq as soon as they are elected.
