Ms Warren, who has exchanged stinging insults with Mr Trump in the past, said she had formed an “exploratory committee” with a view to standing for office in two years.
The Massachusetts senator, known as a liberal firebrand in her party, released a video in which she outlines her vision of a path to opportunity for all Americans.
In the video, Ms Warren stressed the economic populist message that has brought her to national prominence.
She mixed old family photos with charts showing the declining middle-class share of income and the gap between black and white wealth and discussed her her family’s struggle to make ends meet after her father had a heart attack that left him unable to work.
She said: “Working families today face a lot tougher path than my family did.
“Our government’s supposed to work for all of us, but instead it has become a tool for the wealthy and well-connected.”
She did not mention Mr Trump by name in the video but it showed images of him along with Kellyanne Conway and Steve Bannon and Fox News personalities Tucker Carlson and Sean Hannity.
The video says: “The whole scam is propped up by an echo chamber of fear and hate designed to distract and divide us – people who will do or say anything to hang on to power.”
She later issued a Twitter post in which she said: “Every person in America should be able to work hard, play by the same set of rules and take care of themselves and the people they love.
“That’s what I’m fighting for and that’s why I’m launching an exploratory committee for president. I need you with me.”
Ms Warren said in September she would take a “hard look” at running for the Democratic nomination to challenge Mr Trump in 2020.
She and Mr Trump clashed frequently throughout the 2016 presidential campaign and the President has since cast aspersions on her claim to Native American ancestry, referring to her as “Pocahontas”.
Ms Warren, an architect of the Consumer Financial Protection Bureau set up after the 2008 financial crisis, has been a strong voice in the US Senate on financial issues.
The 69-year-old former Harvard Law School professor campaigned with Democratic presidential candidate Hillary Clinton in 2016 and attacked Mr Trump as an “insecure money grubber” driven by greed and hate.