The report particularly focused on problems in the Netherlands, where Muslims number about 850,000, saying that Muslims face societal resentment based on the belief that Islam is not compatible with Western values.
The report blamed right-wing politicians for playing a role in fuelling the resentment.
It said: "Major incidents of violence against Muslims were rare, but minor incidents, including intimidation, brawls, vandalism, and graffiti with abusive language, were common."
It added that the department's annual human rights report is mandated by Congress to allow MPs to factor the issue into decisions on allocated aid to foreign countries.
Among other countries, the report most critically faulted human rights practises in Belarus, China, Cuba, Iran, Myanmar, North Korea, Zimbabwe, Sudan, Syria and Russia.
China and Iran
The report criticised China for crackdowns on Uighurs and in Tibet, as well as increased restrictions to the internet and other forms of information and news.
Assistant Secretary of State Michael Posner said: "The Chinese government's human rights records remain poor and worsening in some areas, including increased cultural and religious repression of ethnic minorities ... and increased detention and harassment of activists and public-interest lawyers."
The State Department also focused on Iran and the repression of demonstrators who took to the streets following June's presidential election. Dozens of people were killed and thousands were detained, some facing prosecution.
Posner said: "An already poor human rights situation (in Iran) rapidly deteriorated after the June elections. It is a place where we are continuing to see severe repression of dissent and are continuing to pay great attention."
The report also cited the increased toll conflicts in some countries inflicted on the civilian population in 2009, including in Afghanistan, Sudan, Sri Lanka and Pakistan.
There remain "significant human rights challenges" in Pakistan, the report said of the important US ally in the war on terrorism. The report said there were extrajudicial killings, torture, and disappearances.
The State Department cited reports the military carried out up to 400 killings during counterinsurgency operations against the Taliban in North West Frontier Province and the Swat Valley.