After living in Seattle, Washington, with her infant son Barack from September 1961 to June 1962 while taking classes at the University of Washington, Ann Dunham returned to Honolulu and resumed her undergraduate education at the University of Hawaii in January 1963. In January 1964 she filed for divorce from her estranged husband, Barack Hussein Obama Sr., who had left Hawaii in June 1962 to pursue graduate study at Harvard University.

Soetoro earned his bachelor's degree in geography from Gadjah Mada University, in Yogyakarta. In 1962, Soetoro, then a civilian employee of the Indonesian Army Topographic Service, obtained an East–West Center grant for graduate study in geography at the University of Hawaii at Manoa. He arrived in Honolulu in September 1962 and graduated from the university with a M.A. in geography in June 1964.

Soetoro and Dunham met at the East-West Center while both were students at the University of Hawaii. Soetoro and Dunham married in Hawaii on 15 March 1965. Soetoro, a geographer, returned to Indonesia in 1966, to help map Western New Guinea for the Indonesian government, while Dunham and her son moved into her parents' house in Honolulu to complete her studies at the University of Hawaii; she earned a B.A. in anthropology in 1967. Her son attended kindergarten from 1966 to 1967 at Noelani Elementary School in Honolulu.

In 1967, Dunham and her six-year-old son moved to Jakarta to rejoin Soetoro. The reunited family initially lived in a new modest stucco and red tile house at 16 Kyai Haji Ramli Tengah Street in a newly built neighborhood in the Menteng Dalam administrative village of the Tebet subdistrict in South Jakarta for two and a half years, and owned a new Japanese motorcycle. From January 1968 to December 1969, Dunham taught English and was an assistant Director of the Lembaga Persahabatan Indonesia Amerika (LIA)–the Indonesia-America Friendship Institute–which was subsidized by U.S. government. Obama attended the Indonesian-language Santo Fransiskus Asisi (St. Francis of Assisi) Catholic School around the corner from their house for 1st, 2nd, and part of 3rd grade.

In mid-1970, between 3rd and 4th grades at the Besuki School, Obama spent the summer in Hawaii with his grandparents, Stanley and Madelyn Dunham, and interviewed for admission to the Punahou School in Honolulu. On 15 August 1970, Soetoro and Dunham had a daughter, Maya Kasandra Soetoro.

In mid-1971, Obama moved back to Hawaii to live with his grandparents and attend Punahou School starting in 5th grade. A year later, in August 1972, Dunham, with the help of her employer (LPPM), obtained an Asia Foundation grant to begin graduate study in anthropology at the University of Hawaii at Manoa. She and her daughter moved back to Hawaii where they rejoined Obama.

Dunham completed her coursework at the University of Hawaii for a M.A. in anthropology in December 1974, and after three years in Hawaii, returned with her daughter to Jakarta in 1975 to complete her contract with LPPM and do anthropological field work. Obama chose to stay with his grandparents in Hawaii to continue attending Punahou School for high school. In 1976, Dunham and her daughter moved to Yogyakarta, living for half a year with Soetoro's 76-year-old mother.

Soetoro married Erna Kustina in 1980 and had two children, a son, Yusuf Aji Soetoro (born 1981), and daughter, Rahayu Nurmaida Soetoro (born 1987).

Soetoro died, age 52, on 2 March 1987, of liver failure, and was buried in Tanah Kusir Cemetery, South Jakarta.

In his 1995 memoir Dreams from My Father, Obama described Soetoro as well-mannered, even-tempered, and easy with people; he wrote of the struggles he felt Soetoro had to deal with after his return to Indonesia from Hawaii. He described his stepfather as following "a brand of Islam that could make room for the remnants of more ancient, classical, and Dharmic philosophies such as that of the Hindu." In a 2007 article, Chicago Tribune foreign correspondent Kim Barker reported that Soetoro "was much more of a free spirit than a devout Muslim, according to former friends and neighbors."