"The people are right, not the government," the moderate cleric said, in a speech marking one year since he launched an Iranian bill of rights.
"We must work to make the rights of citizens a culture," Rouhani said, urging the youth and social media users to air their grievances if rights are not "implemented".
Rouhani's landmark bill of rights is meant to guarantee freedom of speech, protest, fair trials and privacy.
But reformist media have been critical of him for failing to deliver greater social freedoms.
Many institutions in the Islamic republic, including the judiciary and the Revolutionary Guards, remain firmly in the grip of hardliners and do not answer to the president.
Turning his sights on the security establishment, he called on them to "reduce interference" in people's lives and "let them mind their business".
"People want the government to leave them alone," he said.
Rouhani -- elected for a second term in May on the back of support from younger voters -- has opposed tough controls on the internet that see websites like Twitter and Facebook blocked.
He himself has recently faced public criticism over the national budget for next year that he presented to parliament last week.
But he insisted he welcomed the sniping and called for greater transparency.
Appealing to his base, he also blasted intrusive background checks on students by security officials and a practice that has seen some banned from continuing their studies.
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