It was a bittersweet moment, with Obama making one of his final goodbyes to celebrated artists as president.
The First Couple received a long standing ovation as they entered the Opera House of the Kennedy Centre, a monument to the late president John F Kennedy.
As he kicked off the evening, host Stephen Colbert said America was lucky to have a "passionate, intelligent and dignified" president.
That brought applause and by far the longest standing ovation from the sold-out crowd in the Opera House, panelled in dark red woven fabric under a massive Lobmeyr crystal chandelier gifted by Austria.[arve url="https://www.youtube.com/embed/m90RBOFbdK8" align="center"/]
Colbert then joked: "Sir, I don't know why you stood up. I was talking about Michelle."
"This is a joyous day. It's the best Christmas present!" Staples told AFP on the red carpet about receiving what is considered the nation's highest honour for lifetime achievements in the performing arts.
At 77, Staples lives up to the maxim that age is only a number.[caption id="attachment_38581" align="aligncenter" width="768"] 2016 Kennedy Centre Honourees, Al Pacino (L), Martha Agerich (C) and James Taylor (R) receive applause during the gala in Washington DC AFP/Chris Kleponis[/caption]
"People ask me, 'Mavis, when are you going to retire?' Retire for what? I love what I'm doing and I intend to sing until I can't sing no more, forever," she said.
Aretha Franklin, Sean Penn, Kevin Spacey and Ringo Starr were among a series of surprise A-listers -- the awardees are notoriously kept in the black about who will pay tribute to them prior to the event -- who serenaded and hailed the legacy of the award recipients.
Virtuoso Israeli-American violinist Itzhak Perlman, now wheelchair-bound, and 29-year-old Chinese pianist Yuja Wang played on the huge stage in honour of Argerich, with Perlman saying he felt lucky to have been alive during her time.
At an earlier reception at the White House, Obama called the awards "One of the perks of the job that I will miss."
Kennedy Centre chairman David Rubenstein thanked the Obamas, who have hosted a reception for the honourees and attended the gala for eight years, and offered them a "golden ticket" for free admission to any event at the national arts centre.
But there's a catch. "Parking is extra," he quipped.
Obama jokingly asked Eagles guitarist Joe Walsh, a notorious troublemaker, not to trash the White House because he is leaving soon and wants his "security deposit" back.[arve url="https://www.youtube.com/embed/MGhMdT_C-vQ" align="center"/]
Founding member Glenn Frey died in January, and his prior illness caused The Eagles to postpone their awards last year. So Don Henley, Timothy Schmit and Joe Walsh received the medallions and rainbow-coloured ribbons, as did Frey's widow Cindy over the weekend.
Band manager Irving Azoff couldn't hold back tears as he raised a glass to Frey during Saturday's State Department reception.
"For our Eagles family, 2016 couldn't have had a harder beginning or a more appropriate ending," he said.
Grammy Award-winner Juanes gave a stunning performance of "Hotel California" with guitarist Steve Vai, who spoke of the "surreal" experience of playing the piece's famed guitar riff in front of the musicians.
Garth Brooks, Sheryl Crow and Darius Rucker played some of Taylor's best hits, including "Carolina in my Mind" and "Sweet Baby James."
Taylor, 68, performed "America the Beautiful" at Obama's second inauguration in January 2013, while Staples, who like none other provided the music of the civil rights movement, sang at Kennedy's inauguration.
Argerich, 75, is widely considered one of the world's best, if reclusive, living pianists.
For nearly two decades, she largely shunned solo performances, playing almost exclusively with orchestras and chamber ensembles, until a sold-out recital at Carnegie Hall in New York in 2000.
"I was surprised. I didn't think I was entitled," Argerich, who is famously wary of publicity, said of learning she had won the award.[arve url="https://www.youtube.com/embed/RUE4v1rUpSM" align="center"/]
Academy Award nominee Don Cheadle hailed Pacino's humility despite a long and storied career that has seen him perform in some 100 films and plays, including "The Godfather," "Scarface, "Sea of Love," "Heat" and "Scent of a Woman."
Kevin Spacey said: "Pacino immerses us in his characters so we can experience the humanness in monsters and the monstrosities in humans."