It would be "the height of irresponsibility" to pass the war along to the next commander in chief, she said.
"This was his decision to go to war with an ill-conceived plan and an incompetently executed strategy," the Democratic senator from New York said her in initial presidential campaign swing through Iowa.
"We expect him to extricate our country from this before he leaves office" in January 2009, the former first lady said.
The White House condemned Clinton's comments as a partisan attack that undermines U.S. soldiers.
About 130,000 American troops are in Iraq and Bush has announced he was sending 21,500 more as part of his new war strategy.
Clinton held a town hall-style forum attended by about 300 activists, giving a brief speech before taking questions for nearly an hour. Pressed to defend her vote to authorize force in Iraq before the U.S.-led invasion in March 2003, Clinton responded by stepping up her criticism of Bush.
"I am going to level with you, the president has said this is going to be left to his successor," Clinton said. "I think it is the height of irresponsibility and I really resent it."
Bush describes Iraq as the central front in the global fight against terrorism that began after the attacks of Sept. 11, 2001. "The war on terror will be a problem for the next president. Presidents after me will be confronting ... an enemy that would like to strike the United States again," he recently told USA Today.
One questioner asked Clinton if her track record showed she could stand up to "evil men" around the world.
"The question is, we face a lot of dangers in the world and, in the gentleman's words, we face a lot of evil men and what in my background equips me to deal with evil and bad men," Clinton said. She paused to gaze while the audience interrupted with about 30 seconds of laughter and applause.
Meeting later with reporters, she was pressed repeatedly to explain what she meant. She insisted it was a simple joke.
"I thought I was funny," Clinton said. "You guys keep telling me to lighten up, be funny. I get a little funny and now I'm being psychoanalyzed."
During the town hall meeting, she tried to make clear that she thinks she would be a chief executive with enough fortitude to confront any danger facing the country.
"I believe that a lot in my background and a lot in my public life shows the character and toughness that is required to be president," Clinton said. "It also shows that I want to get back to bringing the world around to support us again."
The meeting was scheduled for a downtown restaurant but was switched to a pavilion at a nearby park when it became clear that hundreds of people planned to attend.
At virtually all her stops in this early nominating state, she ran into questions about her Iraq vote. She says Bush misled Congress and she now wants a cap on the number of troops, as well as beginning a "phased redeployment" of troops from Iraq.
The White House said it was disappointing that Clinton was responding to Bush's new war strategy "with a partisan attack that sends the wrong message to our troops, our enemies and the Iraqi people who are working to make this plan succeed."
"The height of irresponsibility," spokesman Rob Saliterman said, "would be to cap our troop numbers at an arbitrary figure and to cut off their funding."
Clinton does not support cutting funding for American troops, but does favor that step for Iraqi forces if the Baghdad government fails to meet certain conditions.
Clinton defended the role that Congress has played, saying newly empowered Democrats are beginning to build pressure on Bush to act, but the public needs to be patient.
"We are at the beginning of a process," Clinton said. "It's a frustrating process, our system is sometimes frustrating."
In making the case for her candidacy, Clinton cites her years as first lady, when Bill Clinton was president for two terms, and two winning campaigns for the Senate.
"I believe that my qualification and my life experience equip me to hit the ground running in January of 2009," Clinton said. "I have a unique perspective having been in the White House for eight years and understanding the challenge that comes from trying to govern our great country."
Clinton said he will run hard in Iowa's leadoff caucuses, an early contest her husband skipped when he sought the nomination in 1992. That year, Iowa Sen. Tom Harkin was in the race and Democratic rivals opted not to challenge him in his home state.
"My participation in the Iowa caucuses is the only thing in politics that I will do that Bill has not done," she said.