The US President drew plenty of laughs with his barbed remarks to a ballroom filled with journalists, politicians, and film stars.
Trump, who attended last year’s dinner, was absent from last night's event.
The US President joked that it should be the perfect place for Trump — a room full of reporters, celebrities and cameras.
“Is this dinner too tacky for the Donald?” Obama said.
“Is he at home eating a Trump steak, tweeting out insults to Angela Merkel? What is he doing?”
Obama commended Trump's foreign policy experience, noting that the businessman previously owned the Miss Universe pageant and "has spent years meeting with leaders from around the world - Miss Sweden, Miss Argentina, Miss Azerbaijan".
He also said that Trump's property experience might come in handy when it comes to closing the controversial Guantanamo Bay detainment facility.
He joked: "And there's one area where Donald's experience could be invaluable, and that's closing Guantanamo - because Trump knows a thing or two about running waterfront properties into the ground."
The British royal family also made it into Obama's speech, as the Democrat described the pains of being a lame duck president.
"Last week Prince George showed up to our meeting in his bathrobe," Obama cracked. "That was a slap in the face."
Obama took a few more swipes at the presidential race, noting that "next year at this time someone else will be standing here in this very spot, and it's anyone's guess who she will be".
It is not the first time that the 54-year-old leader has poked fun at Trump.
In 2011, Obama joked that he would be releasing his official birth video - a jibe directed at the 69-year-old property tycoon who frequently questioned the president's birth certificate.
A clip from Disney's The Lion King was subsequently played to a room full of laughing journalists, politicians and celebrities.
Among the film and television performers at Saturday's event were Helen Mirren, Jared Leto, Bryan Cranston, Will Smith, Jeff Goldblum, Rachel McAdams and Tom Hiddleston.
Proceeds from the dinner go towards journalism scholarships and reporting awards.