Rajnath Singh's visit to Islamabad was the first by a minister to Pakistan after the January 2 attack.
The US has called for closer cooperation between India and Pakistan in the fight against terrorism, amid fresh tension between the two South Asian neighbours over "glorifying" terrorism".
The remarks by the US State Department came as Indian Home Minister Rajnath Singh asked Islamabad not to "glorify or patronise" terrorists, in response to Pakistan describing Hizbul Mujahideen commander Burhan Wani as a "martyr".
"We encourage regional dialogue regarding counter-terrorism efforts. We advocate for closer cooperation between India and Pakistan to deal with terrorist threats in both the countries," US State Department spokesperson Mark Toner said during a daily briefing on Thursday.
He said, "terrorism is obviously a reality in both countries, and they need to - in order to effectively confront it, they need to work together. And that's something we've long encouraged."
Mark Toner made the remarks while responding to a question about a two-day home/interior ministers meeting of the South Asian Association for Regional Cooperation (SAARC) that ended in Islamabad on Thursday.
The deputy spokesperson added that the SAARC forum allowed Pakistan and India to hold a "candid" discussion on the "areas of disagreement and concern".
Rajnath Singh, in his address at the SAARC meeting, said that there is "no good or bad terrorism" and urged that "terrorists should not be glorified or patronised".
Pakistan hosted the SAARC meeting amid a bloody unrest in Jammu and Kashmir that has left more than 50 people dead in clashes between security forces and protesters in nearly a month of turmoil.
Mr Singh criticised the Pakistan government for describing terrorist Burhan Wani as a "martyr".
No bilateral meeting between Rajnath Singh and his Pakistani counterpart took place in Islamabad.
Rajnath Singh's visit to Islamabad was the first by an Indian minister to Pakistan after the January 2 attack on an Indian Air Force base at Pathankot.