The video titled 'Bombardment of peaceful Muslims in the city of Mosul' shows how the Iraqi city of Mosul has been damaged by Peshmerga shelling.
Damaged buildings, bodies and injured children are seen as the IS militant alleges that several dozen peaceful Muslims have been poisoned with "asphyxiating gases" and lost their lives to American Crusader bombs.
The masked IS militant warns attacks on the US, France, Belgium and the Kurds are imminent.
The militant further claims IS followers are planning to murder the American and Kurdish presidents and wreak havoc with explosives in countries supporting the US-led coalition against IS.
"This is the fate of anyone who opposes Islam. Know, oh Obama, that we will reach America. Know also that we will cut off your head in the White House and transform America into a Muslim province.
"And this is my message to France and its sister, Belgium. We advise you that we will come to you with car bombs and explosive charges and we will cut off your heads."
The militant is then seen beheading a Kurdish soldier as crowd behind him is heard cheering.
The Middle East Media Research Institute (Memri) has said the IS video threatening Obama was released on Monday (26 January).
Mosul witnessed heavy Peshmerga shelling and US-led coalition air strikes two days before the IS video threatening the US President was released.