The US is to reduce the number of its diplomats posted to Europe, and will send more to other countries, including China, India, Nigeria and Lebanon.
Rice said the US must be "where the action is"
"America must begin to reposition our diplomatic forces around the world," Secretary of State Condoleezza Rice said on Wednesday.
She said it was an anomaly that the US had the same staff levels in Germany as in India, more than 10 times the size.
She said the redeployment would help foster democratic and economic change.
Ms Rice told students at Georgetown University that President George Bush's administration was committed to "transformational diplomacy".
The philosophy was an attempt "to seek and support the growth of democratic movements and institutions in every nation and culture, with the ultimate goal of ending tyranny in our world," she said.
"Transformational diplomacy is rooted in partnership, not in paternalism," she said, adding that it was based on "doing things with people, not for them."
Although the state department has 7,440 diplomats in foreign countries, there are nearly 200 world cities of more than a million people in which the United States has no formal diplomatic presence, she said.
"This is where the action is today, and this is where we must be."