Nancy Powell, the US ambassador to India, shook hands with Modi who presented her with a bouquet at his official residence in the western state of Gujarat where he is chief minister, before closed-door talks.
The pair held "comprehensive and wide-ranging discussions" in the state capital Gandhinagar including on economic development, "terrorist groups", India's assistance in Afghanistan and health, Modi's office said.
Modi also raised a recent row over the "ill-treatment" of a New York-based Indian diplomat, whose arrest and strip search sparked fury in India.
The chief minister said that "such irritants" should not happen if the Indo-US relationship were to realise its full potential, according to a statement from his office.
The United States in 2005 refused Modi a visa under a domestic law that bars entry to any foreign official seen as responsible for "severe violations of religious freedom".
Modi, leader of the Hindu nationalist Bharatiya Janata Party, is accused by rights groups of turning a blind eye to riots that killed up to 2,000 people in Gurajat in 2002 when he was chief minister. Most victims were Muslims.
Modi has denied any wrongdoing and investigations have cleared him of personal blame, although one of his former ministers was jailed for life for instigating the killing of 97 Muslims.
Powell's meeting brings the US in line with European nations and Australia, which have already restored ties with Modi, as opinion polls show him on course to win power at general elections in May.
Powell did not speak to reporters after the almost hour-long meeting.
"This meeting was part of the US mission's outreach to senior leaders of India's major political parties in advance of the upcoming national elections," the US embassy said in a statement.
If elected premier, Modi would be highly unlikely to experience problems with travel to the US, which generally allows visits by leaders of friendly countries.
Modi has sought to portray himself as a business-savvy leader who can revive India's economy and tackle corruption after a decade of rule by the left-leaning Congress party.
US automaker Ford is due to open a plant this year in Gujarat, where Modi is praised for running an efficient, pro-business government, while General Motors already has a facility there.
Strategic analyst Brahma Chellaney said the United States "is trying to show that it is willing to kiss and make up" given the likelihood of Modi ousting Congress.
"Mr Modi is ahead of his political rivals in all the opinion polls, so the US is simply seeking to protect its economic and strategic interests," Chellaney, from the Delhi-based Centre for Policy Research, told AFP.
Powell will also meet the Congress opposition leader in the state parliament, non-governmental groups and US and Indian businesses while in Gujarat. The US embassy statement emphasised that both sides were seeking "a strategic partnership that is broad and deep".
Modi stated the need to "isolate terrorist groups irrespective of their base or victims" and bring those responsible for the Mumbai attacks in 2008 swiftly to justice, his statement said.
They discussed India's efforts to train officials in neighbouring Afghanistan and assist women in rural areas there, it said.
The US and India have built a growing relationship since estrangement in the Cold War, with most US lawmakers supportive of ties with Delhi.
But Modi has faced opposition from left-leaning members of the US Congress active on human rights as well as academics.
An invitation for Modi to speak last year via Skype at the Wharton School of the University of Pennsylvania was withdrawn after student organisers and professors protested against his participation.
The US-India relationship went through one of its worst crises in years at the end of last year when American authorities arrested Indian diplomat Devyani Khobragade on charges of visa fraud involving her domestic servant and lying about how much she paid her.
Indian lawmakers and commentators accused US authorities of humiliating the diplomat through a strip-search.
The row abated a month ago when Khobragade was allowed to return to India just as she was indicted.
COMMENTS (12)
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@gp65: In a situation like this and in politics in general, the facts don't matter........perception in what counts.
He is my Leader,Future of India "The Development Icon"
Here is an interesting read on Modi, his governance style and Pakistan
http://www.internationalpolicydigest.org/2014/02/07/can-pakistans-shahbaz-sharif-replicate-indias-narendra-modis-governance-style/
@BCCI
You are right. There are only hypocrites.
Politics is not about Ideology but merely opportunity. With India growing at the pace and scale it is currently, every country wants to have a greater share of the market pie. Modi will keep smiling and embrace everyone but he will not forget the sources of the slight. He may also drive very hard bargains when he yields even an inch. He is also not a man who will go back on his word, like the other run of the mill Politicians. Magar Delhi bahut dur hai !
It was only time that was needed for the countries to come calling on him. My vote will go to NaMo if he promises to the following: he will not be a sissy with Pakistan as was Congress was. They are a clear and present danger and the world knows it. He has to stop India's 'soft: approach and be aggressive. India is not 1962. The military has to be given a more hands free parameter to not only defend the borders but to aggressively go after the deadly neighbor that harms India. The days of carrot has evaporated,
The writing was on the wall all the time..When will Pakistanis understand - there are no permanent friends and permanent foes in International Politics.
Peace!!
India + 1...........America - 2
this is what you call a leader to stand on principal
So Modi was right in saying that he will make Americans stand in line to get Indian visa. Good job Modi bhai