The new spending would increase to $3.4 billion under the new plan, which is set to be formally unveiled next week as part of Obama's final presidential budget.
The Pentagon also said Tuesday it was ramping up spending for the battle against ISIS, doubling last year's request to $7 billion.
The White House said that figure would allow for "continuous U.S. armored brigade rotations" through stations in central and eastern Europe, as well as ramped-up U.S. participation in NATO military exercises and the deployment of additional combat vehicles and supplies to the region.
Obama has sought to affirm the U.S. commitment to NATO ever since Russia annexed sections of Ukraine in 2014, causing alarm in other neighboring countries, some of which belong to the military alliance.
In a statement, the President said Tuesday's announcement "should make clear that America will stand firm with its allies in defending not just NATO territory but also shared principles of international law and order."
He said at an upcoming meeting of NATO leaders in Poland the discussion would center on bolstering military commitments among the nations.
"It is clear that the United States and our allies must do more to advance our common defense in support of a Europe that is whole, free, and at peace," Obama said.
Jens Stoltenberg, the NATO secretary general, said the move was a "clear sign of the enduring commitment by the United States to European security."
"It will be a timely and significant contribution to NATO's deterrence, and collective defense," he said in a statement.
But Yury Melnick, a spokesman for the Russian Embassy in Washington, told CNN that the actions are "destabilizing and detrimental to the European security."
"These steps are intended to establish new facts on the ground, and are in contradiction to the NATO-Russia Founding Act principles. There should be no doubt that Russia under any circumstances will be able to defend its citizens and national security interests," Melnick said. "At the same time, confrontation is not our choice, and the right path for the U.S. and NATO in Europe, if they want to return to normal relations with Russia, would be de-escalation, self-containment, and responsibility in their military posture."