"If you're disappointed by your elected officials, grab a clipboard, get some signatures, and run for office yourself," Mr. Obama said to cheers.
The President made only one real reference to his successor in his speech, which quickly drew boos from the crowd, boos that Mr. Obama quieted.
"No, no, no, no," he said, again vowing to offer Donald Trump a smooth transition.
While the President talked about ways to bring the country together, the immediate reaction to the speech brought a familiar divide.
On hand for the address, Rep. Hank Johnson D-GA said Obama "will be sorely missed but I know you have more to offer our nation and the world."
But for one of Johnson's home state GOP colleagues, it was a different view, as Rep. Doug Collins (R-GA) denounced the speech for being filled with lies and "half-truths."
In his speech, the President set out what he said were the main challenges to the U.S. democratic ideals - economic inequality, racial divisions, an excessively coarse debate, and not working hard enough to help the country.
"Our Consititution is a remarkable, beautiful gift," Mr. Obama said.
"All of this depends on our participation; on each of us accepting the responsibility of citizenship, regardless of which way the pendulum of power swings," he added.