Condoleezza Rice has met Muammar Gaddafi, the Libyan leader, in the first such contact in more than half a century.
Rice said her visit proved that Washington had "no permanent enemies" after she arrived in Tripoli, the Libyan capital, on Friday.
The trip to the north African nation is the first by a US secretary of state in 55 years.
"Quite frankly I never thought I would be visiting Libya, so it is quite something," Rice said ahead of her arrival.
"It is a beginning, it is an opening, it is not, I think, the end of the story."
Rice met Muammar Gaddafi, the Libyan leader, and is expected to sign a trade and investment deal during her visit.
Guma al-Gamaty, a writer on Libyan affairs, told Al Jazeera: "The Americans are in [this relationship] for the long term just for their strategic interests.
"This has all been done at the expense of human rights ... there are no rights in Libya and no democracy - the Americans are doing business with a dictator and it discredits them.
"Gaddafi is a ruthless, totalitarian ruler ... and he is preparing to pass his power on to his son.
"This visit says to other countries, especially in the Middle East, the US is only interested in oil and nothing else."
Miloud Lemhadabi, a professor of international law in Tripoli, told Al Jazeera: "Good cheap and easily accessible energy is a main target for the West and Libya is an ideal choice to reach that target."
"Libya wanted to jump over the Lockerbie reprisals to build a modern state after long years of sanctions. The West also saw a big opportunity in business and trade partnership with a rich nation.
Mistrust and violence
Experts say the main thrust of the visit is to signal a new era in US-Libyan relations that had been marked by decades of mistrust and violence.
Relations with Tripoli began to warm after Libya gave up an arms programme in 2003 but Rice had held back on visiting the country until a compensation package was signed last month to cover legal claims involving victims of US and Libyan bombings.
US officials said Rice planned to raise human rights concerns as well as regional conflicts in Chad, Sudan and the recent coup in Mauritania.
Rice is also expected to push Gaddafi on a compensation package signed last month.
No money has been paid into the compensation fund yet but the lead US negotiator with Libya, David Welch, said he was optimistic it would happen soon.
Libya finalised legalities to set up the fund on Wednesday and one senior US official said it would take "more than days" before enough money was in the account and payments could be made to both sides.
No details have been given over who will put money into the fund or how much it will amount to but outstanding legal claims could run into billions.
US victims covered include those who died in the 1988 bombing of Pan Am Flight 103 over Lockerbie, Scotland, which killed 270 people, and the 1986 attack on a Berlin disco that killed three people and wounded 229.
It should also compensate Libyans killed in 1986 when US aircraft bombed Tripoli and Benghazi, killing 40 people.
Rice has come under criticism at home for making the trip before the money is paid out.
And families of dissidents have also criticised her for giving legitimacy to Gaddafi.
One woman, who lives in Tripoli, told Al Jazeera: "The West seeks its own interests. They'll benefit from improving relations much more than Libya."
Another resident said "of course there's plenty of economic benefits for the West".
Rice is also set to visit Tunisia, Algeria and Morocco before returning to Washington on September 7.