"This is not amnesty, this is not immunity. This is not a path to citizenship. It is the right thing to do," said Obama.
Starting Friday, young undocumented immigrants, brought to the U.S. when they were under the age of 16, will not be deported, under these conditions: if they've lived continuously in the country for the past five years, or they're attending or have graduated from high school, or have been honorably discharged from the military.
The announcement brought hugs of joy from undocumented students, many of whom watched the presidential speech live. Many young people say the new law will bring them out of the shadows.
"I can do what everybody else can do now. I can drive a car hopefully, I can just not be afraid to be deported," said Wendy Balderas, an undocumented student.
"It's really emotional for everyone. We don't know if we want to cry or scream," said Alonso Salas, an undocumented student.
"This is real to me and this is going to have real-life implications to my life," said Alonso Salas, an undocumented student.
While those who want reform are delighted. The president's Republican challenger is pouncing.
The economy is the number one issue in the race for the White House, but even the Republicans are admitting what the president did will help him in November.
The president says it makes no sense to expel talented young people from the country, but even as he spoke undocumented students occupied Obama campaign offices around the country in protest.
"We are going to stay here until Obama signs an executive order that stops the deportations," said UC Berkeley student Ju Hong, from the Obama office in Oakland.
But in Berkeley, minority students applauded the president's plan.
"Yes, I know a lot of people that will be impacted? personally I have friends," said Juany Torres, a Stanford University student.
Torres is talking about classmates she has at Stanford.
Jesse Sanchez is entering his senior year at Harvard. He says, "At Harvard there are actually quite a few students that I know that are undocumented that are there now studying." And he adds this is an issue that will drive Latino voters in November. "All that we're looking for his hope, a chance for a better life."
"Just looking at my Facebook newsfeed and my twitter newsfeed, the movement on immigration has grown increasingly over these past 24 hours and I feel like it will be huge," said Torres.
Friday afternoon, Mitt Romney responded saying the president overstepped. He said, "The president's action makes reaching a long term solution more difficult."
That talking point was repeated by the chair of the California GOP, Tom Del Beccaro. He thinks, "This could be more divisive in the long run and less helpful to the country than if he created a consensus and passed a law."
"So if you can't win on the policy, you talk about the process as being somehow bad," said Henry Brady, Ph.D., dean of the Goldman School of Public Policy at UC Berkeley. "This is something that's popular, it's something that will really help in the Hispanic community where he's been having troubles."
In San Francisco some well-known Republicans are urging Romney to move away from his conservative base.
"Some of which are rednecks some of which are practically criminal in their approach to immigration," said Leo Lacayo, chair of the San Francisco Hispanic Republican Assembly and an immigration attorney. He is a firm believer that the Republicans should be providing a path to legalization. "And if our politicians don't carry that message, they heed this warning, they may not get elected."
In talking with Brady, he points out this issue will be much bigger in California than in some of the swing states like Ohio, but it's not just going to play in the race for the White House. There are House and Senate races in California, in Florida, and lots of other states where Brady says this issue could be significant.