Cheney said Iraqi leaders felt sectarian violence was "down fairly dramatically" even though car bombings and suicide attacks still claim a heavy toll.
"I think everybody recognises there still are serious security problems, security threats, no question about it", adding that "we've got a long way to go".
"I emphasised the importance of making progress on the issues before us, not only the security issues but also on the political issues that are pending before the Iraqi government," he said.
"I do believe that there is a greater sense of urgency now than I'd seen previously."
Despite his claims of progress, hundreds of Iraqis took to the streets of Baghdad and Najaf to protest against his visit and call for the withdrawal of US troops.
Cheney was at the US embassy inside the heavily protected Green Zone in central Baghdad when an explosion rattled windows, prompting officials to move reporters to the basement for several minutes.
Witnesses said a mortar or rocket appeared to have been fired from the mostly Shia areas on the east side of the Tigris river towards the Green Zone.
In Washington, sagging public opinion of George Bush, the US president, has put pressure on the White House to show al-Maliki's government is making progress in attaining stability.
US troop withdrawal will begin later this year if progress is shown.
The vice-president's visit comes two days after Bush held a video conference with al-Maliki about achieving political reconciliation among the majority Shia, the Sunnis and the Kurds.