"Many of the young people today, they only know Barack Obama as their president and what that standard felt like and what kind of messages were being talked about," she said at the Pennsylvania Conference for Women on Tuesday. "They grew up only under hope and possibility and options and opportunity and creating more space."
Without saying Trump's name, she added: "I think they will feel some of what's happening now as intrinsically not what they were taught."
The former first lady said the leadership potential of the next generation gives her hope despite the messages they're being faced with.
"They are more open, in ways. I think they are less tolerant of obvious inequities. I think that this generation will look at what is happening now in the world and they will say, 'This doesn't feel right because this wasn't what I was taught,'" she said.
Obama said one of the cornerstones of the Obama Presidential Center, which will be hosted by the University of Chicago on the South Side of Chicago, will be developing policies to help young leaders, especially young women, grow their potential.
Obama said she believes it is crucial to welcome new ideas, new voices and diverse perspectives to the table, especially when it comes to politics.
"People hold on, maybe a little bit too long," she said. "When you're living in the White House or you're serving in Congress or the Senate, it's a very unique bubble of isolation. You don't get to have the same kind of interaction and, therefore, there are some parts of you that do lose touch. So it's important to make way for those new perspectives."
She added: "A lot of people treat those seats like they belong to them. And they don't. Those seats belong to the country."
Obama said Congress not only suffers a lack of new ideas but a lack of racial diversity. She recalled being on Capitol Hill for the State of the Union address and noticing the lack of diversity in the chamber.
"It's a feeling of color, almost. On one side of the room, it's literally gray and white, literally, that's the color palette on one side of the room. On the other side of the room, there's yellows and blues and whites and greens, physically there's a difference in color in the tone. Because one side, all men, all white. On the other side, some women, some people of color," she said, arguing that the Democratic side of the chamber was more diverse than that of the GOP.
"And I look at that and I go, no wonder. No wonder we struggle. No wonder we don't trust politics. But it's not just politics," she said.
Reflecting on her life post-White House, as well as her husband's, Obama said they are looking forward to the freedom that comes from being out of the political arena.
"It feels like things are pretty wide open. For the last eight years, because we sort of had a standard of ethics and there were things that we wouldn't do ... there were a lot of constraints. There was a lot we couldn't do and we didn't do because of our respect for the position," she said, again seemingly hitting Trump: "What it means to the country to actually have a commander in chief who upholds and respects the office. So definitely, life is freer now."