US Secretary of State Mike Pompeo on Sunday welcomed Serbia's agreement to designate the political and military wings of Hezbollah as a terrorist organisation.
Mr Pompeo said this would deal another setback to the Iran-backed Lebanese group's operations in Europe.
"This important action was announced as part of the historic commitments President Trump secured on a wide range of economic normalisation issues between Serbia and Kosovo, coupled with the steps both nations are taking to help achieve peace in the Middle East," Mr Pompeo said.
US President Donald Trump hosted a meeting of Serbian President Aleksandar Vucic and Kosovan Prime Minister Avdullah Hoti at the White House this month.
The leaders agreed to establish economic ties in a major step towards easing tension between Serbia and its former province.
Serbia also agreed to designate Hezbollah as a terrorist organisation.
"Serbia’s announcement that it will designate Hezbollah as a terrorist organisation in its entirety is another significant step limiting this Iranian-backed terrorist group’s ability to operate in Europe," Mr Pompeo said.
"There is no doubt that the dominoes are falling on Hezbollah’s European operations, where it has continued to plot terrorist attacks, procure military technology and raise much-needed funding."
Kosovo declared the political and military wings of Hezbollah a terrorist organisation in June this year. Germany, Lithuania and the UK had done so earlier.
Mr Pompeo called for the EU and all European nations "to designate or ban Hezbollah in its entirety, and recognise the reality that it is a terrorist organisation root and branch with no distinction between its so-called military and political wings".
"We urge all countries in Europe and elsewhere to take whatever action they can to prevent Hezbollah operatives, recruiters and financiers from operating on their territories," he said.