Obama will be the first serving US president to set foot in the country also known as Burma, in the starkest illustration yet of its emergence from a long period of isolation and repression.
He is expected to praise President Thein Sein for ending a dark era of junta rule and for welcoming opposition leader Aung San Suu Kyi into mainstream politics, but also to prod the former general to go much further towards genuine democracy.
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Obama will use a major speech at Yangon University to hail "the flickers of progress" in Myanmar, the White House said.
"Today, I have come to keep my promise, and extend the hand of friendship," Obama will say, according to excerpts of his address. "But this remarkable journey has just begun, and has much further to go."
The setting for the speech will be rich in symbolism as the university was the scene of past episodes of pro-democratic student unrest, including mass demonstrations in 1988 that ended in a bloody military crackdown.
"Instead of being repressed, the right of people to assemble together must now be fully respected," Obama was to say. "Instead of being stifled, the veil of media censorship must continue to be lifted."
In a nod to a recent wave of deadly sectarian violence in western Rakhine state, Obama will urge Myanmar to "draw on diversity as a strength, not a weakness".
In a scene that would have been unthinkable until recently, Obama will on Monday stand side-by-side with democracy icon Aung San Suu Kyi at the lakeside villa where his fellow Nobel laureate languished for years under house arrest.
The White House hopes Obama's visit to Myanmar will boost Thein Sein's reform drive, which saw Suu Kyi enter parliament after her rivals in the junta made way for a nominally civilian government -- albeit in a system still stacked heavily in favour of the military.
US officials said Obama would announce a $170 million development aid pledge to Myanmar to coincide with the formal opening of a US Agency for International Development (USAID) mission in Myanmar, which was suspended for years over the junta's repression of the democracy movement.
The money, spread over a two-year period, will target projects in civil society designed to build democratic institutions and improve education as Myanmar lays the groundwork of a political system based on freedoms.
Some human rights groups said Obama should have waited longer to visit, arguing that he could have dangled the prospect of a trip as leverage to seek more progress such as the release of scores of remaining political prisoners.
Myanmar unveiled new pledges on human rights on the eve of the visit, saying it would review prisoner cases in line with "international standards" and open its jails to the Red Cross, as part of efforts to burnish its reform credentials.
The United States on Friday scrapped a nearly decade-old ban on most imports from the country, after earlier lifting other sanctions.
But it continues to call for the release of scores of political prisoners still in Myanmar's jails, as well as an end to sectarian bloodshed between Buddhists and Muslims in Rakhine state.
Obama fever has swept Myanmar's biggest city Yangon, with his image emblazoned on T-shirts, mugs and even graffiti-covered walls.
"I would like to tell President Obama to push the Myanmar government to walk the path to democracy bravely and to aim for full human rights which our country needs," said 28-year-old shopkeeper Thant Zaw Oo.
Obama's trip to Asia, coming less than a fortnight after his re-election, is the latest manifestation of his determination to anchor the United States in a dynamic, fast-emerging region he sees as vital to its future.
The Hawaii-born US president is making his fifth official visit to the region, where he spent four years as a boy in Indonesia, and is diving back into foreign policy after a year spent on the campaign trail.
Later on Monday Obama will fly to Cambodia, where he is likely to face a tense encounter over human rights with Prime Minister Hun Sen, ahead of the East Asia Summit, the main institutional focus of his pivot of US foreign policy to the region.
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