US Secretary of State Condoleezza Rice has held up Indonesia's "tolerance" as an example to the Muslim world, on her first official visit to the nation.
She acknowledged that US foreign policy was not always popular but said she respected all faiths and welcomed Indonesia's help in fighting terror.
Talks with President Susilo Bambang Yudhoyono also covered bird flu and the nations' resumption of military ties.
Hundreds of people protested in Jakarta as Ms Rice's two-day visit began.
Chanting anti-US slogans, they held a rowdy demonstration outside the heavily guarded US embassy building in the capital.
Analysts say Washington is keen to build closer ties with the world's most populous Muslim state.
"We are fighting a very tough enemy, an enemy that has been felt here in Indonesia with bombings in Bali and Jakarta"
Speaking in Jakarta with Foreign Minister Hassan Wirayuda, Ms Rice praised Indonesia's co-operation in fighting terror and its pursuit of democracy as an "inspiration" to the Muslim world.
"I think Indonesia has a very big role to play as an example of what moderation, tolerance and inclusiveness of society can be," she said.
Ms Rice also sought to counter criticism in the region of US actions abroad.
"I understand that the United States has had to do things in the world that are not that popular in much of the world," she said.
"We are fighting a very tough enemy, an enemy that has been felt here in Indonesia with bombings in Bali and Jakarta."
Democracy speech
Mr Wirayuda acknowledged the countries' differences on some issues but thanked the US for its support of the peace process in the troubled Aceh region.
A spokesman for Mr Yudhoyono said he and Ms Rice had discussed regional security and developments in the Middle East, as well as the relationship between Islam and the West.
Ms Rice is expected to give a speech on democracy in the Islamic world on Wednesday, before heading to Australia.
On Tuesday, she was given a tour of one of Jakarta's oldest Islamic schools, during which she was questioned by pupils.
She also announced an $8.5m (£4.9m) US grant to support an educational Sesame Street TV programme for Indonesia.
'Lethal weapons'
Ahead of her visit, Ms Rice said Indonesia had made "giant strides" after 32 years of President Suharto's autocratic rule.
Last November the US lifted a six-year arms embargo and re-established other military relations.
The move - a reward for Indonesia's help in anti-terror operations - came despite opposition from US politicians who wanted arms supplies linked to real reform.
Sanctions had been in place after Indonesian troops were accused of carrying out atrocities in breakaway East Timor in 1999.
Mr Yudhoyono, who was elected in 2004 in the country's first-ever direct elections, twice visited Washington to try and get the ban lifted.
Ms Rice "should use her trip to announce that the US will refuse to provide them with lethal weapons and will insist on robust monitoring of whatever aid it sends," said Lisa Misol, of the New York-based Human Rights Watch group, ahead of the trip.
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