"I think he is a transformational figure, he is a new generation coming onto the world stage, onto the American stage, and for that reason I'll be voting for Sen. Barack Obama," Powell said on NBC's "Meet the Press."
Powell said he was concerned about what he characterized as a recent negative turn of Republican candidate Sen. John McCain's campaign, such as the campaign's attempts to tie Obama to former 1960s radical Bill Ayers.
"I think that's inappropriate. I understand what politics is about -- I know how you can go after one another, and that's good. But I think this goes too far, and I think it has made the McCain campaign look a little narrow. It's not what the American people are looking for," he said.
Powell, a retired U.S. general and a Republican, was once seen as a possible presidential candidate himself. Powell said he has some concerns about the direction of the Republican Party, adding that it has "moved more to the right than I would like to see it."
In regard to the financial crisis, which Powell called the candidates' "final exam," Powell said McCain appeared unsteady in dealing with it, while Obama had excelled in handling the situation.
"Obama displayed a steadiness, an intellectual curiosity, a depth of knowledge," Powell said. "He has met the standard of being a successful president, being an exceptional president," he said.
During the campaign, Powell has met with both candidates and said he has a lot of respect for McCain. He said Sunday that he thinks both candidates are qualified to be president. "It isn't easy for me to disappoint Sen. McCain in the way that I have this morning, and I regret that," Powell said.