Speaking from Martha's Vineyard where he is on vacation with his family, Obama called for Middle Eastern nations and others to join together to "extract this cancer so it does not spread."
A video released Tuesday by the terrorist group showed a masked extremist with a British accent beheading James Foley, 40, who went missing in Syria in November 2012.
"We can all agree that a group like ISIL has no place in the 21st century," Obama said.
He called their ideology "bankrupt" and dismissed their claim that they are at war with the United States and the West as one of expediency.
Foley's beheading provoked international condemnation.
International resolve against the violent IS jihadist grew, with pledges by Germany and Italy to help arm the Peshmerga in Iraq's Kurdish region.
In the video, the extremists threatened to kill another US journalist in their captivity, identified as Steven Joel Sotloff, who was seen kneeling alive in the video.
AFP