The monument includes Greenwich Village's Stonewall Inn bar, the small park next door, and the immediate vicinity, where protests that came to be known as the Stonewall Uprising erupted in 1969 following a police crackdown.
"The designation will create the first official National Park Service unit dedicated to telling the story of LGBT Americans," the White House said in a statement.
On June 28, 1969, officers arrived at the Stonewall Inn to enforce a law that forbid the sale of alcohol to gays.
Customers resisted the police crackdown and a crowd gathered outside, with riots ensuing on nearby streets.
In the days that followed, demonstrations and clashes with police continued, and nearby Christopher Park became a gathering place for members of the LGBT (lesbian, gay, bisexual and transgender) community to express their frustrations and steel their resolve.
The events are "widely considered to be a watershed moment when the LGBT community across the nation demonstrated its power to join together and demand equality and respect," the White House said.
Christopher Park and Stonewall Inn remain to this day a rallying spot for the LGBT community.
Following the Orlando massacre, the deadliest mass shooting in US history that left 49 dead at a gay nightclub earlier this month, thousands gathered in the area.
It's also where the gay community gathered to celebrate the Supreme Court decision to legalize gay marriage in all 50 states on June 26, 2015.
The designation of the monument comes just days before the one-year anniversary of that decision.
Gay rights groups heralded Obama's announcement Friday.
"The Stonewall National Monument will pay tribute to the brave individuals who stood up to oppression and helped ignite a fire in a movement to end unfair and unjust discrimination against LGBTQ people," president of Human Rights Campaign advocacy group, Chad Griffin, said in a statement.
Within a year of the Stonewall Uprising New York, Los Angeles, San Francisco and Chicago began to hold annual pride marches. Traditionally held in June, New York's is scheduled for Sunday.
Stonewall Inn, Christopher Park and their immediate surroundings were classified national historic sites in 2000.
The Stonewall National Monument will report to the National Park Service.
