The United States was elected to the 47-member council, the UN's main body for promoting and protecting human rights worldwide, for a three-year term ending in 2019.
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In a letter to eight rights groups, Tillerson said the US administration continues to "evaluate the effectiveness of the UN Human Rights Council" which is currently meeting in Geneva.
"We may not share a common view on this, given the make-up of the membership," he said. Council members include China and Cuba, which have been criticized by the United States for their rights record.
"While it may be the only such organization devoted to human rights, the Human Rights Council requires considerable reform in order for us to continue to participate."
Tillerson said the United States would press on with its "strong, principled objection to the Human Rights Council's biased agenda item against Israel."
President Donald Trump's administration has vowed to defend Israel at the United Nations and rebuked the rights council for adopting resolutions that criticize Washington's Mideast ally.
The new US administration will seek to renew the mandate of the Commission of Inquiry on Syria and ensure that rapporteurs for North Korea, Iran and Myanmar continue their work, he said in the letter dated March 8.
Tillerson did not give any indication of the deadline for a decision on the US seat at the council.
Rights groups are urging the United States to be a voice for human rights worldwide at the UN body.
The former US administration of Barack Obama played a key role in some of the council's major successes such as ground-breaking inquiries of atrocities in Syria and North Korea.
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"The United States is an integral part of the Human Rights Council," said UN spokesman Stephane Dujarric. "It's important that every country participate in its work."
The letter was sent to the Jacob Blaustein Institute, the Better World Campaign, the Committee for Human Rights in North Korea, Freedom House, Freedom Now, Human Rights First, Human Rights Campaign and the United Nations Association of the United States of America. It was first reported by Foreign Policy magazine.
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