Modi was welcomed by Obama who greeted him in Gujarati, "Kem Chho?" (how are you?), the mother tongue of the Prime Minister.
Set in an informal ambiance, the dinner is the first opportunity for both the leaders to interact with each other.
First Lady Michelle Obama, however, gave the dinner a miss.
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Both the leaders were joined by 20 attendees at the dinner. The President was joined by Vice-President Joe Biden, secretary of state John Kerry and NSA Susan Rice among others.
Modi was accompanied by external affairs minister Sushma Swaraj, national security advisor Ajit Doval and Indian ambassador to the US S Jaishankar among others.
As Obama hosted Modi for dinner, the local Indian-Americans celebrated the Modi-Obama meeting by organizing a cultural event and performing "Garbha" dance in front of the White House.
A small group of Kashmir separatists and Sikh separatists also held a protest outside the White House building, but they were far out numbered by the pro-Modi supporters.There was an unprecedented level of security in and around the White House and Blair House, the official guest house of the US President, in view of the two recent security breaches.
(Activists gathered in Layette Park and along Pennsylvania Avenue supporting and protesting Indian Prime Minister Narendra Modi's visit to the presidential mansion. Photo: AFP)
The Pennsylvania Avenue was closed for most part in the evening and the pro-Modi group and anti-India protesters were pushed far behind when the motorcade crossed the avenue on its way to the White House.
Obama received Modi at the South Gate of the White House and the dinner was held in Blue Room of the President's official residence.
The Blue Room is used for receptions and receiving lines, and is occasionally set for small dinners.
Modi's grand reception in NY reflects deep cultural ties: White House
The "rockstar" treatment given to Prime Minister Narendra Modi at the prestigious Madison Square Garden by some 20,000 Indian-American people is the reflective of the "deep cultural ties" between the two countries, the White House said on Monday.
"I think the strong turnout at that event and the enthusiastic reaction highlights the deep cultural ties that exist between the United States and India; that there are so many immigrants from India to the United States that are now interwoven into communities all across the countries," White House press secretary Josh Earnest said.
He was responding to questions about the historic turnout of some 20,000 Indian diaspora who had turned up from various parts of the country to attend the reception for Modi at the prestigious MSG in New York City on Sunday.
"I think that just highlights one other way in which the relationship between our two countries is so important," Earnest said.
On Sunday, Modi joined a long but exclusive list of international singers and film stars among others who have spoken at the iconic Madison Square Garden. Modi was perhaps the first international delegate from a country to speak at this venue, which opened on February 11, 1968.
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