Venezuelan President Hugo Chavez has called on the US ambassador in Caracas to retract his assertion that drug trafficking in the country is rising.
Mr Chavez said the claims were "a lack of respect for the truth"
Mr Chavez said the comments were absolutely false and that a retraction would demonstrate that Washington is serious about wanting good relations.
William Brownfield said poor police collaboration was making Venezuela a preferred drug route to the Caribbean.
The comments follow recent improvements in relations between the two countries.
Mr Chavez said the US ambassador's claims were "a lack of respect for the truth" and said they were "absolutely false".
The president blamed US drug consumption for the problem and accused the US of turning from communism to the drug war to justify its military presence in the region.
In comments published on Tuesday by the Venezuelan newspaper El Nacional, Mr Brownfield said the estimated amount of cocaine smuggled through Venezuela had increased to about 300 metric tons in 2006.
"The drug traffickers have identified a vacuum because there is less police collaboration than in any other country... they take advantage of Venezuela to move their product toward the Caribbean," he said.
However, Mr Brownfield said the two countries could make progress in the areas of trade, energy and anti-drug efforts despite deep political differences.
He said Washington could use its improved relations with both China and Vietnam as a blueprint for relations with Venezuela.
Diplomatic ties have shown signs of improvement since Venezuelan President Hugo Chavez was re-elected by a landslide earlier this month.
Bilateral trade has continued to grow in recent years, despite worsening relations during the same period and is expected to hit a record $50bn (£25bn) in 2006.
Last week, the two countries said they had made a positive start to improving relations after a lengthy meeting between Mr Brownfield and Venezuela's foreign minister.
Relations had worsened since claims of US involvement in a coup attempt against Mr Chavez in 2002.
The White House has often accused Mr Chavez of harming regional stability.
In September, Mr Chavez referred to US President George Bush as "the devil" during a speech before the UN General Assembly in New York.