The nation's top Justice Department official, in a letter to Republican Senator Rand Paul, who released it, stressed that US military and intelligence agencies currently have "no intention" of carrying out such an attack.
Paul branded Holder's refusal to comprehensively rule out such a drone strike "more than frightening."
Three Americans are known to have been killed in US drone strikes, including Al-Qaeda propagandist Anwar al-Awlaki. They were targeted in Yemen, not on US soil, but questions have been raised about the legitimacy of the tactic.
Paul had sought information on the president's authority to authorize lethal drone strikes as part of the confirmation process for John Brennan, President Barack Obama's pick to head the CIA.
"The question you have posed is... entirely hypothetical, unlikely to occur and one we hope no president will ever have to confront," Holder wrote, in a later dated Monday.
"It is possible, I suppose, to imagine an extraordinary circumstance in which it would be necessary and appropriate under the Constitution and applicable laws of the United States for the president to authorize the military to use lethal force within the territory of the United States."
Holder cited the attacks of September 11, 2001 and on Pearl Harbor by the Japanese in 1941 as examples where use of such force might be justified.
Brennan, a 25-year Central Intelligence Agency veteran, is known as the chief architect of the drone war, and he faced repeated questions at his confirmation hearing over the "targeted killings."
The approval followed a White House decision to turn over to Congress several secret Justice Department memos that may have been used to justify the president's ability to authorize the targeted killing of Americans.
Paul, who has long questioned the legality of the government's use of lethal force -- including strikes by unmanned drones -- against US citizens, expressed alarm at Holder's response.
"The US attorney general's refusal to rule out the possibility of drone strikes on American citizens and on American soil is more than frightening," he declared.
"It is an affront (to) the Constitutional due process rights of all Americans," he said.
Paul had also sought Brennan's views on drone strikes, and the nominee wrote back that the CIA has no authority to launch such attacks on US soil.
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