In her 30-minute speech, the first lady invoked Mississippi's segregation history, noting how Saturday's ceremony was being held in the same stadium where a whites only University of Mississippi football game was held over 50 years ago that she said doubled as an anti-integration rally.
"For years it stood as a steel and concrete tribute to segregation because Jim Crow laws meant that only white teams and fans were allowed through these gates," Obama said.
Obama told graduates she understands their feelings of lingering discrimination.
"Maybe it's when you're driving somewhere and you're stopped for no particular reason. Maybe it's when the store you enter into, folks seem to keep an extra close eye on you as you shop," the first lady said.
"I wish I could say otherwise, graduates, but the question isn't whether you're going to come face to face with these issues. The question is how you're going to respond when you do."
She said she and President Barack Obama have some of those same feelings, and encouraged the audience to not to lash out, but to "take a deep breath."
"Lift up your head and do what Barack Obama has always done, as he says, 'when they go low, I go high.' That's the choice Barack and I have made. That's what's kept us sane over the years."
The first lady reminded students that change starts with the ballot, invoking pop culture to make her point.
"You can hashtag all over Instagram and Twitter, but those social media movements will disappear faster than a Snapchat if you're not also registered to vote," Obama said.
She chastised the more than half of young African-Americans whom she said "have essentially disenfranchised themselves."
"In the 2014 midterms, African-American youth turnout was less than 20%. And here in Mississippi it was almost lower," she said.
She told the audience that failure to vote would "roll back hard-earned freedom," citing Mississippi's controversial religious freedom bill passed earlier this months that LGBT rights groups and the state's businesses have decried as discriminatory.
"We see it right here in Mississippi just two weeks ago how swiftly progress can hurdle backwards, how easy it is to single out a small group and marginalize them because of who they are and who they love," she told the crowd. "So we've got to stand side by side with all our neighbors."
Obama will deliver two more 2016 commencement speeches to the Santa Fe Indian High School and The City College of New York.