The 29-year-old transgender US Army private, born Bradley Manning, will be freed on 17 May instead of her scheduled release in 2045.
She was sentenced to 35 years in 2013 for her role in leaking diplomatic cables to the anti-secrecy group. The leak was one of the largest breaches of classified material in US history.
She twice attempted suicide last year at the male military prison where she is being held at Fort Leavenworth, Kansas.
Manning also went on a hunger strike last year, which ended after the military agreed to provide her with gender dysphoria treatment.
In one of his final acts as president, Mr Obama granted commutation of sentences to 209 individuals and pardons to 64 others.
Earlier it was reported that Obama extended sanctions against Russia until March 2018. Sanctions imposed in 2014, were due to expire in March 2017.