The University of Chicago Law School community couldn't be more thrilled about Kagan's nomination.
"We are pretty excited in general. We are excited for Chicago," said Pedro Soto, second-year U of C law student.
Kagan would be the first justice in almost 40 years without experience as a judge.
"I think it's fine. It's different at that level, a different type of judging anyhow. I think she'll be fine," said Amanda Gomez, third-year U of C law student.
Kagan beat out three other finalists, including Chicago appeals court judge Diane Wood -- a twice-almost Supreme Court nominee herself.
"I'm disappointed that Judge Wood wasn't nominated. She was my civil procedure professor," said Steven Donohue, second-year U of C law student.
Just last week, Kagan was in Chicago to give a speech with the man she could replace, Justice John Paul Stevens, whose legacy includes holding the line on issues like the preservation of abortion rights and limits on the death penalty.
Unmarried and born in New York City, the daughter of a tenant lawyer and a teacher, Kagan holds degrees from Princeton, Oxford and Harvard. She also clerked for federal appeals court judge Abner Mikva, who later became an important political mentor to Obama in Chicago.
It's thought that she is sure to face questions during Senate confirmation hearings about never having been a judge, her record of legal writings and her objections to the military's policy about gays.
"I look forward to working with the Senate and thank you, Mr. President, for this honor of a lifetime," Kagan said.
Obama cited what he called Kagan's "openness to a broad array of viewpoints" and her "fairmindedness."
Kagan, 50, was the first female dean at Harvard Law School and the first woman to serve as solicitor general, the top Supreme Court lawyer for a presidential administration. She worked as a law professor with President Obama in Chicago.
Kagan was a professor at the University of Chicago in the early '90s before becoming dean of the Harvard Law. Kagan has spent much of her career teaching the law rather than arguing cases in the courtroom.
Retiring Justice John Paul Stevens would be the man she replaces. Kagan poked fun at 90-year-old Stevens last week at an events where both appeared in Chicago.
"Justice Stevens is starring in his own 'Benjamin Button' movie," said Kagan.
She has also worked closely with all three branches of government and is known for her ability to bring together people of differing views.
"I don't think that anybody he appoints will go through unanimously, but I think a number of the people who have been talked about will go through relatively easily," said Ronald Allen, Northwestern University law professor.
Kagan is considered a moderate choice. The White House is eager to avoid a battle over the pick, especially with elections in November. Kagan could be the fourth woman ever to serve on the Supreme Court and the first in 40 years who has not previously been a judge.
"People will get an understanding of who she is and what her judicial philosophy is," said Eric Holder, attorney general.
The White House wants Kagan's confirmation by the U.S. Senate to happen sooner rather than later, hopefully sometime this summer. That way, they can see her by the time the court convenes by the fall.
If confirmed, Kagan would be the third female justice on the high court, marking the first time so many women have been on the court. If confirmed, the court would be comprised of six Catholics and three Jews, marking the first time no Protestants have sat on the court. At 50, Kagan would be the youngest justice on the current Supreme Court if confirmed.
Kagan would be the first justice with no experience as a judge since William H. Rehnquist and Lewis F. Powell Jr. joined the court in 1972.
She has clerked for Thurgood Marshall and worked for Bill Clinton.
When she was confirmed as solicitor general in 2009, only seven Republicans backed her.
In a statement issued before Kagan had completed her remarks, the lawmaker who will preside over her confirmation hearing, Democratic Sen. Patrick Leahy of Vermont, said, "The Senate should confirm Ms. Kagan before" Labor Day.
"Our constituents deserve a civil and thoughtful debate on this nomination, followed by an up-or-down vote," he said.
The Republican leader, Sen. Mitch McConnell of Kentucky, said his party would make sure there was a "thorough process, not a rush to judgment" on the nomination.
"Judges must not be a rubber-stamp for any administration. Judges must not walk into court with a preconceived idea of who should win," he said, adding that Republicans would have a vigorous debate on that principle.
Obama began with high praise for the retiring Stevens, a leader of the court's liberals, calling him "a giant in the law," impartial and having respect for legal precedence.
Kagan "embodies the same excellence, independence and passion for the law," Obama said.
"She's an acclaimed legal scholar with a rich understanding of constitutional law. She is a former White House aide, with a lifelong commitment to public service and a firm grasp of the nexus and boundaries between our three branches of government," Obama said. Kagan served in the Clinton White House.
Obama noted that neither Kagan's mother nor father "lived to see this day, but I think her mother would relish this moment. I think she would relish, as I do, the prospect of three women taking their seat on the nation's highest court for the first time in history ... a court that would be more inclusive, more representative, more reflective of us as a people than ever before."
Kagan's family reacts to nominationKagan's family members in Chicago reacted to news of her nomination Monday.
"She's very fair-minded, she's very intelligent. And she's totally awesome," said Joyce Kagan Charmatz, Elena Kagan's aunt.
Charmatz says she's thrilled and a little overwhelmed that her niece has been nominated to the Supreme Court by President Obama. She saw Kagan just last week when she came to Chicago to give a speech with the man she could replace, Justice John Paul Stevens.
"It's a historic moment for the Kagans, of which I am very proud of my heritage, but it's also a historic moment for the world and for all young women that are coming up," said Charmantz.
Kagan, who is currently the solicitor general, has a keen intellect and is politically savvy and has enjoyed a trailblazing legal career. She was the first female dean of Harvard Law School, known for bringing opposing sides together. She also clerked for Judge Abner Mikva, who recommended her to her to University of Chicago Law School where she was hired as a professor in the early 1990s. There, she gained a reputation as a demanding but fair teacher with a good sense of humor. That's also where she met President Obama who taught there at the same time.
"She was incredible in class just amazing charisma, the ability to make really complicated and convoluted ideas quite clear," said Carolyn Shapiro, Chicago Kent College of Law.
"And through most of my professional life, I've had the simple joy of teaching, of trying to communicate to students why I so loved the law, not just because challenging and endlessly interesting, although it is certainly that, but because law matters," said Kagan.
Kagan does not have any judicial experience, although some experts say that should not be a road block during her Senate confirmation hearings. There are questions as to her political views with some conservatives wondering if she's too progressive.
"I would imagine she'll incline to the progressive side of the court, but she's not going to be a liberal lion who would take more extreme positions," said Geoffrey Stone, University of Chicago Law School.
Meanwhile, Kagan's relatives say they're looking forward to the hearing.
"The things that we're hearing from both the left and right in terms of their experiences with her shows that I think President Obama made a wonderful choice. Not that I'm biased or anything," said Irv Kagan, cousin.With Democrats in control of the Senate, they should be able to win Kagan's confirmation. Republicans have shown no signs that they would try to prevent a vote. In fact, seven Republicans voted for her last year when she was nominated for solicitor general. But the chair of the Republican National Committee says serious and tough questions will be raised to examine Kagan's qualifications.
The Associated Press contributed to this report.