Obama met the Nobel Prize laureate for 45 minutes, praising him for embracing non-violence while reiterating that the United States did not support independence for Tibet.
China, which accuses the Dalai Lama of being a separatist who supports the use of violence to set up an independent Tibet, reacted swiftly, saying Obama's meeting had had a "baneful" impact, and summoning a senior U.S diplomat in Beijing.
"This action is a gross interference in China's internal affairs, hurts the feelings of the Chinese people and damages Sino-U.S. relations," Foreign Ministry spokesman Ma Zhaoxu said in a statement released in the early hours of Sunday.
"The Dalai Lama has for a long time used the banner of religion to engage in anti-China splittist activities," he added.
"We demand the United States conscientiously handle China's principled and just stance, immediately take steps to remove the baneful impact, stop interfering in China's internal affairs and stop abetting in and supporting 'Tibet independence' anti-China splittist forces."
In a separate statement carried on its website (www.mfa.gov.cn), it said Vice Foreign Minister Cui "urgently summoned" Robert S. Wang, Charge d'Affaires at the U.S. embassy in Beijing, to lodge China's objections.
"China expresses its strong indignation and resolute opposition," the statement said. "Tibet is an inseparable part of China, and Tibetan issues are purely an internal matter for China.
"Maintaining the continuous stable development of Sino-U.S. ties requires hard work from both sides."
The Dalai Lama denies China's accusations, saying he wants a peaceful transition to true autonomy for the remote Himalayan region, which China has ruled with an iron fist since 1950, when Chinese troops marched in.
The White House said in a statement that the Dalai Lama told Obama he was not seeking independence for Tibet and hoped that "dialogue between his representatives and the Chinese government can soon resume". [ID:nN1E76F05X]
Obama's meeting came at an extra sensitive moment for China, the United States' biggest creditor, with leaders in Washington at odds over how to raise the $14.3 trillion U.S. debt ceiling in time to avoid default.
China holds more than $1 trillion in U.S. Treasury debt and would be particularly exposed should Congress fail to reach a deal by Aug. 2. A U.S. default could rocket up interest rates, sink the value of the U.S. dollar and hurt the global economy.
Beijing's relationship with Washington had started to get back on track following a visit to the United States by Chinese President Hu Jintao, following arguments over everything from human rights to trade and U.S. arms sales to Taiwan.
Obama's meeting with the Tibetan spiritual leader was his first in more than a year.
Obama stressed the "importance he attaches to building a U.S.-China cooperative partnership", the White House said.
"The president reiterated his strong support for the preservation of the unique religious, cultural and linguistic traditions of Tibet and the Tibetan people throughout the world," White House spokesman Jay Carney said in a statement after the meeting.
"He underscored the importance of the protection of human rights of Tibetans in China. The president commended the Dalai Lama's commitment to nonviolence and dialogue with China."
Obama also said he encouraged "direct dialogue to resolve longstanding differences, and that a dialogue that produces results would be positive for China and Tibetans."
The Dalai Lama, who has met with various U.S. leaders during his stay in Washington, said he felt a "spirit of reunion" with Obama, said Kate Saunders, a spokeswoman for the Washington-based International Campaign for Tibet.
Beijing warned the United States to stay out of its affairs last week after top lawmakers including House of Representatives Speaker John Boehner, the top Republican in Congress, and top House Democrat Nancy Pelosi met the Dalai Lama earlier in his visit to Washington.
This year is made even more sensitive for China in Tibet as the government marks 60 years since the region's "peaceful liberation" and 90 years since the founding of the ruling Communist Party.
Exile groups say Tibet is under even tighter security than normal, and foreign tourists have been banned.
Protests erupted across Tibetan parts of China in 2008. At least 19 people died in the violence in Tibet's capital Lhasa, most of them majority Han Chinese. Pro-Tibet groups abroad say more than 200 people were killed in a subsequent crackdown.