Mr Holbrooke pulled no punches with his comments on anti-narcotics efforts
US efforts to eradicate opium poppy crops in Afghanistan have been "wasteful and ineffective", the US envoy to Afghanistan and Pakistan says.
Richard Holbrooke said the $800m (£550m) a year the US was spending on counter-narcotics would be better used in supporting Afghan farmers.
He said the US also wanted to see an increase in the numbers and capacity of Afghan police.
The US is currently conducting a review of policy on Afghanistan and Pakistan.
Efforts to eradicate poppy cultivation, Mr Holbrooke told a conference in Belgium - the Brussels Forum - had failed to make an impact on the Taleban insurgents' ability to raise money from the drugs trade.
"It hasn't hurt the Taleban one iota," he said, "because whatever money they're getting from the drugs trade, they get whatever they need whether we reduce the acreage or not."
The US said last month that poppy cultivation had been reduced by 19% last year. Despite the drop, the UN estimates that Afghanistan accounts for 90% of the world's illicit heroin supply.
"The United States alone is spending over $800m a year on counter-narcotics. We have gotten nothing out of it, nothing," he said.
"It is the most wasteful and ineffective programme I have seen in 40 years."
Mr Holbrooke said much of the money should be redirected to helping Afghanistan's farmers.
He spoke of a "very significantly expanded agricultural sector job-creation set of programmes - irrigation, farmer to market roads, market places, seed."
Opium trafficking provides the Taleban with much of its income
The Obama administration is currently reviewing US policy towards Afghanistan and Pakistan.
President Barack Obama named Mr Holbrooke as his special envoy for the two countries shortly after taking office in January.
Mr Holbrooke also said the US had asked its allies in the Nato-led Isaf to help train thousands more Afghan police.
"The Afghan national police are an inadequate organisation riddled with corruption," he said.
"We know they are the weak link in the security chain, so we have to figure out a way to increase the size and make them better at the same time."
Senior Nato commanders have warned that there will be a further increase in violence this year.
President Obama has approved the deployment of 17,000 additional troops to fight the spreading insurgency.
Mr Holbrooke said, however, that the heart of the threat facing Nato in Afghanistan comes from western Pakistan, where the Taleban have much support.
But he made it clear that US and Nato forces would not chase insurgents across the border into Pakistan.
"There is a red line for the government of Pakistan and one which we must respect," he said.