French authorities, meanwhile, have launched a criminal probe of the Assad regime for alleged war crimes committed between 2011 and 2013, sources said.
A day after clashing with Russian President Vladimir Putin over how to handle the crisis in Syria, Obama hosted a counterterrorism summit at the United Nations to take stock of the one-year air war against IS fighters in Iraq and Syria.
"In Syria... defeating ISIL requires, I believe, a new leader," Obama told the gathering, held on the sidelines of the UN General Assembly.
Russia snubbed the meeting of some 100 leaders, sending a low-level diplomat after Putin stole the limelight with his UN speech calling for a broad coalition to fight IS that would include Syria's army.
Assad's fate is the key bone of contention between Washington and Syria's Russian and Iranian allies amid intense diplomacy over the way forward to end the four-year war that has killed more than 240,000.
The French investigation is focusing on evidence provided by a former Syrian army photographer known by the codename "Caesar," who defected and fled the country in 2013, bringing with him some 55,000 graphic photographs of scenes from the brutal conflict.
The images "testify to the systematic cruelty of Bashar al-Assad's regime," French Foreign Minister Laurent Fabius said.
At the summit, Obama said the United States was ready to work with Russia and Iran to "find a political mechanism in which it is possible to begin a transition process."
The United States has long insisted that Assad must leave power, but Obama did not specify whether the Syrian leader could take part in a transition in an interim role.
Easing Assad out of office through a two-stage transition is one of the options being discussed between US, Russian and Gulf diplomats.
On Wednesday, Russia is due to host a special UN Security Council meeting on confronting terrorist threats -- an event bound to highlight sharp differences in approach.
- Stop barrel bombs -
Hinting at a possible compromise, US Secretary of State John Kerry said Washington could cooperate on Syria if Russia and Iran persuade Assad to stop using barrel bombs against civilians.
"They are both in a position, in exchange perhaps for something that we might do, they might decide to keep Assad from dropping barrel bombs," Kerry said in an interview with MSNBC.
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Western diplomats maintain that Assad has killed more civilians by using barrel bombs dropped from helicopters than IS in its brutal advance in Syria.
Saudi Foreign Minister Adel al-Jubeir echoed Obama's call, saying the Syrian leader must step down or face the prospect of being removed by force.
"There is no future for Assad in Syria, with all due respect to the Russians or anyone else," Jubeir told reporters.
Taking a swipe at Russia, Fabius accused Moscow of displaying bravado on the Syria crisis that had yet to be backed up with action against the fighters.
"You have to look at who is doing what. The international community is striking Daesh. France is striking Daesh. The Russians, for the time being, are not at all," Fabius said, using the Arabic acronym for IS.
- Taking stock -
Obama vowed to crush IS in his UN speech a year ago and called on countries to join the United States in the campaign.
Taking stock one year on, Obama said IS had lost a third of the "populated areas" it controlled in Iraq and had been "cut off" from almost all of Turkey's border region.
But he added that military action alone would not succeed unless efforts were made to address the conditions that allow Islamic radicalism to thrive.
Iraqi Prime Minister Haider al-Abadi called for international aid to equip his troops fighting the jihadists, who triggered alarm after seizing the city of Mosul in June last year.
Since then, IS fighters have captured territory in Syria and Iraq and gained a foothold in Libya, Yemen and elsewhere in the Middle East, with alliances as far afield as Nigeria, with Boko Haram.
On Tuesday, Nigeria, Malaysia and Tunisia joined the coalition that now comprises more than 60 countries.
Iran was not invited to the summit even though it is playing a major role in the fight against IS, providing military advisers, weapons and trainers.
The US-led coalition wants to step up measures to prevent foreign fighters from joining the IS battlefield after a report showed nearly 30,000 had traveled to Iraq and Syria since 2011.