Mr Obama said it was "the beginning, but not the end, of our effort to wind down this war". At least 68,000 US troops will remain in Afghanistan.
French President Nicolas Sarkozy later said he would also begin to withdraw 4,000 French soldiers from Afghanistan.
The Taliban said the insurgency would continue until all foreign forces left.
In a statement it said Mr Obama's announcement was "symbolic".
"[The] Islamic Emirate of Afghanistan once again wants to make it clear that the solution for the Afghan crisis lies in the full withdrawal of all foreign troops immediately and [while] this does not happen, our armed struggle will increase from day to day," the statement said.
Continue reading the main storyWe will not try to make Afghanistan a perfect place. We will not police its streets or patrol its mountains indefinitely”End Quote President Obama All US combat troops are scheduled to leave by 2013, provided that Afghan forces are ready to take over security. The US reductions are larger and faster than military commanders had advised.
They told the president that the recent security gains were fragile and reversible, and had urged him to keep troop numbers high until 2013.
That would have given them another full "fighting season" - in addition to the one now under way - to attack Taliban strongholds and their leaders.
Correspondents say the enormous cost of the deployment - currently more than $2bn a week - has attracted criticism from Congressional leaders, while the public are weary of a war that seems to have no end and has left at least 1,500 personnel dead and 12,000 wounded.
There have also been changes on the ground, notably the killing in May of al-Qaeda leader Osama Bin Laden by US forces in Pakistan.
'Tide of war receding'Mr Obama's announcement, after a month-long strategy review, outlined the exit of the forces he sent to the country at the end of 2009 as part of a "surge".
In his speech, he said he had set clear objectives for the surge in December 2009 - to refocus on al-Qaeda, to reverse the Taliban's momentum, and train Afghan security forces to defend their own country.
His administration also stated the commitment would not be open-ended and that the withdrawal would begin in July 2011, he added.
Continue reading the main storyThis is a moment when President Obama can do what was unthinkable two years ago. He can defy the Pentagon. Early in his presidency it would have been too risky to ignore military advice.”End Quote Mark Mardell BBC North America editor "Tonight, I can tell you that we are fulfilling that commitment."
Mr Obama said the US was starting the withdrawal "from a position of strength".
He said: "Al-Qaeda is under more pressure than at any time since 9/11... We have taken out more than half of al-Qaeda's leadership. We have put al-Qaeda on a path to defeat, and we will not relent until the job is done.
"In Afghanistan, we have inflicted serious losses on the Taliban and taken a number of their strongholds. Along with our surge, our allies also increased their commitments, which helped stabilise more of the country."
He added: "After this initial reduction our troops will continue coming home at a steady pace as Afghan security forces move into the lead. Our mission will change from combat to support.
"We will not try to make Afghanistan a perfect place. We will not police its streets or patrol its mountains indefinitely. That is the responsibility of the Afghan government."
Continue reading the main story Bilal Sarwary BBC News, KabulThe US may be setting a timetable for withdrawing its forces, but there are many questions over the first phase of the security transition. In the past few weeks, insurgents have launched what Afghan intelligence officials say is a carefully planned wave of attacks in all of the areas to be handed over by Nato.
In Panjshir, insurgents tried to detonate a car full of explosives but it blew up before it could reach its target. On Tuesday, the influential governor of Parwan province, Abdul Basir Salangi, a close ally of President Karzai, survived an assassination attempt. In the northern city of Mazar-e-Sharif, a bomb explosion injured two civilians.
In some areas, insurgents have blockaded cities and towns, leaving thousands short of food and medicines.
Afghanistan's police and army are still dependent on coalition forces for air support, food, ammunition and roadside bomb-clearing. In addition, they have high rates of desertion and drug addiction, as well as "rogue" soldiers - there have been a number of incidents in which men in uniform have turned their weapons on Nato and Afghan colleagues.
The BBC's Paul Adams in Washington says the speech was all about reassuring the American public that the "tide of war" was receding.Six thousand Americans have died in Iraq and Afghanistan and $1 trillion has been spent. It was time, Mr Obama said, to focus on nation-building at home.
"Even as there will be dark days ahead in Afghanistan, the light of a secure peace can be seen in the distance. These long wars will come to a responsible end," he added.
The initial withdrawal is expected to happen in two phases, with 5,000 troops coming home this summer and another 5,000 by the end of the year. The reduction is the equivalent of about two brigades.
The remainder of the surge reinforcements - 20,000 combat troops and an 3,000 deployed to support the operation - will be out by the end of September 2012, in time for the US presidential election.
Our correspondent says this is a quicker pace than most analysts predicted, and suggests the president does not feel he needs to leave the bulk of the surge force in place for another fighting season.
Administration officials told the New York Times that the US military commander in Afghanistan, Gen David Petraeus, had not endorsed the decision. He recommended limiting initial withdrawals and leaving in place as many combat forces for as long as possible, they said.
Outgoing Defence Secretary Robert Gates and Secretary of State Hillary Clinton reluctantly accepted the reductions, the officials added.
Following Mr Obama's speech, French President Sarkozy's office announced that he would also begin the progressive withdrawal of approximately 4,000 French forces in Afghanistan.
It would operate according to "a calendar comparable to the withdrawal of American reinforcements", beginning in the next few months.
Afghans 'ready'The Republican Speaker of the House of Representatives, John Boehner, said he was pleased the president had recognised that success in Afghanistan was paramount.
"Continuing to degrade al-Qaeda's capabilities in Afghanistan and the surrounding region must take priority over any calendar dates.
"It's important that we retain the flexibility necessary to reconsider troop levels and respond to changes in the security environment should circumstances on the ground warrant."
A senior official at Afghanistan's interior ministry told the BBC: "Just because President Obama is withdrawing 33,000 troops, our government will not collapse at a provincial or a district level," adding the withdrawal simply represented the end of the troop "surge".
But he said it "would have its negative impacts", as the Afghan national army was "still a long way" from being up to the security challenge.
Other senior officials echoed his concerns, saying any withdrawal should be careful and phased, and not endanger territory won at great cost to local and international forces.
US troops have been in Afghanistan since 2001Serious doubts remain about whether Afghan forces will be up to the task.
Mr Obama's announcement comes days after Mr Gates confirmed that the US was holding "outreach" talks with members of the Taliban in Afghanistan.
It was the first time the US had acknowledged such contact.
Meanwhile, a BBC World Service poll has suggested that most people internationally support negotiations with the Taliban.
Forty percent of the 24,000 people in 24 countries surveyed backed peace talks and said the Taliban should be included in an Afghan government.
The poll, which was conducted before Bin Laden was killed, suggested that support for an immediate military pullout by Nato stood at 29%. Just 16% favoured a continued effort to defeat the Taliban.
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