Court observers expect Obama to appoint a woman to join Justice Ruth Bader Ginsburg, currently the only woman on the Supreme Court. Souter's departure will open the first seat for a Democratic president to fill in 15 years.
President George W. Bush had no seats to fill until deep into his second term, when he appointed Chief Justice John G. Roberts Jr. and Justice Samuel A. Alito Jr., bolstering the conservative side of the court.
Sotomayor was on the panel that rejected a new trial for a former radical activist. Judith Clark is imprisoned for being the getaway driver in a 1981 Rockland County armored-truck robbery. The incident left three people dead, including two police officers.
Sotomayor, who will be 55 next month, grew up in the Bronx and became the first Puerto Rican woman to serve as a U.S. Circuit Court judge.
She studied at Princeton and earned her law degree from Yale in 1979.
Sotomayor began her career as an assistant district attorney, trying a wide range of criminal cases under longtime district attorney Robert Morgenthau.
In 1984, Sotomayor entered private practice, and a supervisor there recommended six years later that she apply for a vacated federal seat.
"I had always wanted to be a judge, but I assumed it would happen much later in my career," she's quoted as saying on the American Bar Association's Web site.
President George Bush nominated Sotomayor in 1991 for the U.S. District Court, and she was confirmed the following year.
In March 1995, her injunction against replacement players helped end the Major League Baseball strike.
Two years later, President Clinton nominated her to the U.S. Court of Appeals for the 2nd Circuit, the seat she would vacate if she were to be nominated and confirmed to replace Souter.