Speaking before crucial talks on Iran's nuclear programme, Rice said on Monday the US and its European allies were working to obtain full disclosure on Iran's nuclear activities.
"The world must not tolerate any Iranian attempt to develop a nuclear weapon," Rice said in a speech to the convention of the American-Israel Public Affairs Committee.
She was speaking two days before the foreign ministers of Britain, France and Germany were to meet in Geneva with a top Iranian negotiator in a new effort to persuade Tehran to drop its nuclear arms ambitions.
Washington has backed the European effort to use economic and security incentives with Iran, but has threatened to take the matter to the United Nations if it fails.
Middle East conflict
Rice also strongly backed Israel's planned pullout from Gaza and urged both sides in the Middle East conflict to fulfil their obligations for peace.
A surge in violence has imperilled
the Middle East peace process
She claimed Israeli Prime Minister Ariel Sharon had made "courageous decisions that could change the course of history".
"Israel's disengagement strategy presents an unprecedented and incredibly delicate opportunity for peace," she told the Jewish lobby group. "And we must all work together to capitalise on this precious moment."
Rice said that "all nations must meet their obligations" to implement the US-backed peace road map aimed at the eventual creation of an independent Palestinian state.
In an allusion to the controversy over Israeli settlements in the West Bank, she said: "Israel must take no actions that prejudice a final settlement or jeopardise the true viability of the Palestinian state.
"And Israel must help to create the conditions for the emergence of that democratic state," Rice said.
On the eve of a visit to Washington by Palestinian President
Mahmoud Abbas, Rice said: "The Palestinian Authority must advance democratic reform and it must dismantle all terrorist networks in its society."
"Israel's disengagement strategy presents an unprecedented and incredibly delicate opportunity for peace"
US Secretary of State
Rice also called on Arab states to smooth the peace process. She said they "must end incitement in their media, cut off all support for terrorism and extremist education, and establish normal relations with Israel".
The chief US diplomat made her remarks as Israel and the Palestinians laboured to shore up a fragile Middle East truce.
Some Israeli army officers have called for a delay in the pullout of troops scheduled to start in August. But, in a speech on Sunday night in New York, Sharon reaffirmed his commitment to his disengagement plan.