Obama, while presenting the highest military award to Kettles, 86, called his story "a wonderful inspiration," adding that the takeaway from his bravery is not just "a creed for our soldiers."
"It should be a creed for all of us," Obama said at a White House ceremony. "This is a country that's never finished in its mission to improve, to do better, to learn from our history, to work to form a more perfect union. And at a time when, let's face it, we've had a couple of tough weeks, for us to remember that goodness and decency of the American people and the way we can all look out for each other, even when times are tough, even when the odds are against us, what a wonderful inspiration."
Obama said Kettles did not enjoy the "hubbub" of receiving the honor -- and speaking to reporters after the ceremony, Kettles focused on the other men involved in the rescue and said, "The only thing that really matters" are the lives that were saved.
A number of those men Kettles saved were at the White House for the ceremony, including the last soldier Kettles saved, Dewey Smith.
Obama tweeted: "44 men came home because Chuck Kettles believed that we leave no man behind. That's America at our best."
Kettles, a UH-1 helicopter commander, volunteered to lead a platoon to bring reinforcements to a brigade cornered by North Vietnamese forces near Duc Pho during the early hours of May 15, 1967.
After making several trips to the landing zone in his Huey while taking fire to evacuate wounded U.S. soldiers, he returned later that day to rescue 40 soldiers and four of his crew who were stranded after their helicopter was destroyed in an enemy attack.
But once airborne, Kettles discovered that eight soldiers had been unable to reach the evacuation helicopters due to Vietnamese fire. He returned to assist them, despite damage to his helicopter's tail boom, main rotor blade and windshields.
Obama retold the heroic story, adding he "couldn't make this up" and joking it was "like a bad "Rambo" movie."
Obama remarked on the improved relationship between Vietnam and America since Kettles served.
"I was able to go to Vietnam recently and see a people as enthusiastic about America as probably any place in the world. Crowds lining the streets. And we were able to say that on a whole lot of issues, Vietnam and the United States are now partners."
The Medal of Honor is awarded for "great personal bravery or self-sacrifice so conspicuous as to clearly distinguish the individual above his or her comrades and must have involved risk of life," the White House statement said.
An Army statement said Kettles exhibited "complete disregard for his own safety" during the mission. "Without his courageous actions and superior flying skills, the last group of soldiers and his crew would never have made it off the battlefield."
"I didn't do it by myself," Kettles said in a video released by the Army. "There were some 74 pilots and crew members involved in this whole mission that day. So it's not just me."
Kettles, 37 at the time of the encounter, hails from Michigan and previously served in Korea, Japan and Thailand.
Kettles went on to develop an aviation management program at Eastern Michigan University's College of Technology and work for Chrysler Pentastar.