Ryan Rhodes, a leader of the group in Iowa, took on Obama during an open-air town hall meeting, which marked a moment of new intensity in the president's campaign for a second term.
Rhodes shouted out that the president's calls for more civility in politics had little chance of coming to pass after "your vice president is calling people like me, a Tea Party member, a 'terrorist.'"
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His question referred to media reports that Vice President Joe Biden made such a remark in a private meeting with House of Representatives Democrats at the height of a debt showdown earlier this month.
The clash came as Obama was intent on wrapping up the meeting in the shadow of a red country barn draped with an American flag, as the sun set on a rural corner of Iowa.
"I know it's not going to work, if you stand up, and I asked everybody to raise their hand... I didn't see you, I wasn't avoiding you," the president said, but later circled back to answer Rhodes's question.
"I absolutely agree that everybody needs to try to tone down the rhetoric," he said, before going on to detail some of the more explosive charges that conservatives have laid against him.
"In fairness, since I have been called a socialist who wasn't born in this country, who is destroying America and taking away its freedoms because I passed a health care bill, I am all for lowering the rhetoric."
Obama and Rhodes later engaged in an animated conversation as he greeted supporters on a rope line after the event, and the activist later told reporters that he believed that Obama was indeed a socialist.
The president was on the first day of a three-state bus tour in which he is sympathizing with Americans dismayed and frustrated by the slow pace of the economic recovery and trying to repair his battered political standing.
Rhodes backed winning candidate and Tea Party favourite Representative Michele Bachmann in last weekend's Iowa Straw poll, and is regarded as a founder of the anti-big government movement in the state.
The Tea Party lacks a centralized national leadership but emerged in the 2010 congressional election cycle as a powerful influence on conservative Republican politics, with its message of low taxes and cutting spending.
The movement was also seen as a key driver of Republican leadership tactics in a debt showdown with Obama, and some Democrats accused Tea Party activists of holding the country hostage over raising the government's borrowing limit.
