"We still harbor a level of meanness here in this society that is unhealthy. … We've come to the point where mean is a character trait that we laud. We mistake meanness with toughness. I'm working so hard to teach them not to be mean girls," she said of her daughters.
Obama accused her husband's rivals of using fear to make political attacks and said Americans have a "veil of impossibility" hanging over their heads.
"In America, we spend more time talking about what can't get done, what is impossible. … We pass that on to our children. And we're creating a generation of doubters … kids that are timid."
"I don't want that for my girls," she added.
Her girls are back in Chicago, staying with Michelle Obama's 70-year-old mother.
"There's nothing like grandma," Obama said.
Not surprisingly, Michelle Obama believes her husband is the one who can change the nation's collective cynicism and fear.
"Wisdom and judgment and years of working in the shadows does count. It counts," she said.
The question, she said, is whether Americans are ready to let go of our fear.
"Are you gonna make a decision based on fear or doubt or what is not possible again," she said, emphasizing the word "again." "Or are we gonna grasp hope and possibility?"
"The only candidate who will snatch that veil of impossibility off the heads of all these kids is Barack," she said.
"We could potentially do something big here," she said of her husband's bid.