Mr Obama is predicted to win around 303 electoral college votes compared with 206 for Mitt Romney. Under the electoral college system, a candidate needs 270 votes in order to win the presidency.
Projections show Mr Obama taking the key swing states of Colorado, New Hampshire, Pennsylvainia, Ohio, Virginia and Wisconsin, and is holding a slight advantage in Florida. Mr Romney took North Carolina and Indiana from the President.
US Elections 2012: Live blog
The major American television networks called the election for Barack Obama just after 0400 Universal Time, a few hours after polls closed.
Mitt Romney made his concession speech just before 0600 UT, or just before 1am local time in Boston, the Republican campaign headquarters.
RFI’s Sarah Elzas, reporting from Barack Obama’s campaign headquarters in his hometown of Chicago, said there were wild cheers when the thousands of supporters gathered saw the projections and realised their candidate would be re-elected a second term.
Taking the stage with his wife Michelle Obama and their two daughters, Mr Obama congratulated his Republican rival and his running mate, Paul Ryan, on a “hard-fought” campaign, and held out an olive branch for bipartisanship.
“We may have battled fiercely but it’s only because we love this country deeply and we care so strongly about its future,” he said.
“In the weeks ahead I also look forward to sitting down with Governor Romney to talk about where we can work together to move this country forward.”
He also thanked the thousands of supporters and volunteers who have led his campaign.
“You, the American people, reminded us that, while our road has been hard…we have fought our way back, and we know in our hearts, the best is yet to come,” he said.
There were celebrations on New York’s Times Square, as well as in front of the White House in Washington D.C.
RFI’s Laura Angela Bagnetto, reporting from Mitt Romney’s headquarters in Boston, says Republican supporters were initially buoyant when predictions showed Mr Romney winning the popular vote.
However, when the projections showed his Democrat rival taking Colorado, a traditional Republican state, the mood soured, and several supporters cried.
Mitt Romney, she said, made a “gracious” concession speech.
“This election is over, but our principles endure,” he told a subdued crowd.
“This is a time of great challenges for America, and I pray that the president will be successful in guiding our nation,” he added.
Barack Obama’s re-election has been quickly welcomed by world leaders and politicians, including the French Economics Minister Pierre Moscovici, the Labour minister Michel Sapin, and former Prime Minister François Fillon.
Along with the presidential election, Americans also voted on the make up of the US Congress.
The Republicans are projected to retain control of the House of Representatives, while the Democrats will keep controlling the Senate.
Nineteen women Senators have also been elected, including the first disabled woman, the first openly-gay woman, and the first Asian woman.