A US frigate docked in Vietnam on Wednesday, becoming the first US warship to visit since the Vietnam War.
A small crowd watched as the ship sailed up the Saigon river
The USS Vandegrift sailed into Ho Chi Minh City with some of its 200 crew recording the moment on video cameras.
"The US and Vietnam are showing the world that former foes can become friends," said Raymond Burghardt, US ambassador to Vietnam.
The ship will spend four days in port near Ho Chi Minh City, which as Saigon was the US centre in the war.
The warship made its way into port with US and Vietnamese flags flying and an escort of Vietnamese patrol boats.
"I think this is a very good sign to promote and develop bilateral relations between Vietnam and the US, particularly between the two navies," said Navy Lieutenant Colonel Nguyen Quang Bieu, who was among the Vietnamese delegation at the port.
It gave the Americans, led by Commander Richard Rogers, a red carpet welcome.
"I think my crew genuinely enjoyed coming up the river and seeing the sights as we came up. My crew is very excited to be here," said Commander Rogers.
The visit is the most symbolic of several recent indications that relations have reached a new level.
Last week, Vietnam's Defence Minister Pham Van Tra was in Washington for talks with the US Secretary of Defence Donald Rumsfeld.
It was the first time a senior Vietnamese military official had visited the United States.
Hanoi has said it did not want to dwell on the past, and that better bilateral relations were the best way to solve issues left over by the war.
Analysts said the improving relations also reflected changes in the regional balance of power.
"The Vietnamese now feel comfortable enough to share their strategic concerns with the United States - that means China," Nayan Chanda, editor of Yaleglobal Online Magazine, told BBC News Online.
China is now a regional superpower and an old rival of Vietnam, so Hanoi's relationship with the United States gives it a potential ally in the region to offset Chinese influence.
"I think there will be an increase in cooperation in military areas, like joint sea rescue operations... there could also be anti-terrorist operations," Mr Chanda said.
US troops started withdrawing from Vietnam in 1973 after a peace treaty was signed in Paris.
Two years later Saigon fell after the South Vietnamese, who the Americans had supported, were overrun by the Communist North Vietnamese.
1962 US advisers in S Vietnam
1965 US troops arrive
1968 Peace talks start
1973 US withdrawal starts
1975 N Vietnamese take Saigon
1985 First cooperation on MIAs
1995 Diplomatic ties resume
2001 Trade deal signed
A decade of frosty relations followed, with the first sign of a thaw appearing in the mid-1980s, when Vietnam first cooperated with the Americans in the search for US servicemen missing in action (MIA).
The MIA issue is an ongoing preoccupation for the United States, which lost 58,000 soldiers in the conflict.
An estimated three million Vietnamese were killed.
Under the Clinton administration relations between the two countries improved rapidly. By 1995 diplomatic relations had been re-established and since then bi-lateral trade has flourished.