The program Gates once supported has been controversial from the moment Bush proposed it in a speech on May 1, 2001, months before the 9/11 attacks and a year before revelations about Iran's nuclear program.
It called for putting 10 land-based interceptors in Poland and a ground-based radar in the Czech Republic.
The Europe system was never deployed, so it wasn't tested. But similar ground-based interceptors failed to hit targets in five of 13 tests, according to the Pentagon, and they have not demonstrated an ability to detect decoys, the Government Accountability Office says.
The Bush system would have cost $9 billion to $13 billion, according to the Congressional Budget Office, and still would have left parts of Europe unprotected from an Iranian missile. Instead of the long-range interceptors, the United States will put in place more seasoned technology that will focus on medium- and short-range missiles, of which Iran has hundreds, Gates said.
Critics of the Bush approach praised Obama's announcement.
"What the president is proposing here actually produces more defense sooner than the program it replaces," said former Pentagon testing chief Philip Coyle, a longtime skeptic of the Bush program.
"The canceled European deployment would have added only marginally and at high cost to the full coverage of the United States already afforded by the existing ground-based interceptors," physicist Richard Garwin, who helped design the hydrogen bomb and recently was on a commission to assess the ballistic missile threat, said in an e-mail.
In Central Europe, reactions to the news were mixed. Bush's plan had never been popular in the Czech Republic, where polls showed 70% opposed it. In a March, a Czech government fell in part because it supported the missile shield.
Still, it was seen in both countries as a bulwark against an aggressive and expansionist Russia.
"Much of Europe — especially the Central and Eastern regions — will now view the United States as unable to fulfill its promises to its allies in the face of a strengthening Russia," said an analysis by Stratfor, a Texas-based intelligence firm.
Obama's shift on missile defense may embolden the Russians and "encourage them to push other buttons," said Janusz Bugajski, director of the New European Democracies Project at the Center for Strategic and International Studies, a Washington think tank.
Bugajski said it did not go down well in Poland that Obama made the announcement on the 70th anniversary of the Soviet Union's invasion of Poland at the start of World War II.
He said the United States will need to take steps to reassure Central and Eastern European countries that they will be protected against Russia. For example, NATO could devise defense plans for the countries, he said, or station troops on their territories.
Obama and Medvedev plan to meet twice next week, once at the United Nations and again in Pittsburgh for the G-20 economic conference. Those meetings could show what dividends, if any, the president will reap from his first major foreign-policy shift from his predecessor.
Contributing: David Jackson and Tom Vanden Brook, wire reports.