US government figures suggest that terrorist attacks have fallen to the lowest level for more than 30 years.
Saudi Arabia has cracked down after several attacks
The annual report records a slight fall in the number of international attacks last year and a dramatic decrease in the number of victims.
The report says that less than half the number of people lost their lives in such attacks last year compared with the year before.
However, most of the violence in Iraq has not been included in the figures.
The US government routinely labels many attacks on coalition forces as terrorism, but these do not fit within the report's definitions.
Nevertheless, the State Department coordinator for counter-terrorism, Cofer Black, said there had been significant progress since the US declared a war on terror in the wake of the 11 September attacks.
He said that last year there had been unprecedented cooperation between the United States and foreign countries to defeat terrorism.
The report goes out of its way to praise the work of Saudi Arabia in fighting terror in the wake of two major attacks in the country last year.
The State Department says the attacks galvanised the Saudi government into action, although the clear implication is that Saudi Arabia was not doing enough before then.
The report also criticises some familiar targets.
Iran and Syria are among the countries still condemned as state sponsors of terror.
Such state sponsors, argues the report, provide a critical foundation for terrorist groups.