Venezuela's President Hugo Chavez is one of the biggest dangers facing Latin America, Washington has said.
Ms Rice deplored Venezuela's close relations with Cuba
US secretary of state Condoleezza Rice said Mr Chavez was trying to influence others away from democracy, and called for a united front against him.
President Chavez responded by accusing the US of aggression, saying "world opinion is with Venezuela".
The exchange would appear to undermine recent efforts to improve increasingly strained ties between the two states.
Addressing a congressional hearing on Thursday, Ms Rice accused Mr Chavez of leading a "Latin brand of populism that has taken countries down the drain".
She described Venezuela's close relationship with Cuba as "particularly dangerous".
"The international community has just got to be much more active in supporting and defending the Venezuelan people," she said.
The Venezuelan president dismissed Ms Rice's comments as "crazy".
"Could it be true what the people in the street are saying? That Chavez is driving [US officials] crazy?" he said.
"[The US has] tried for some years to isolate us, to block us. They've failed and they will fail because they are wrong."
On Tuesday, US and Venezuelan diplomats held talks in Washington, which were welcomed by both sides as a step towards greater communication.
Earlier this month, relations hit a new low when Washington expelled a Venezuelan diplomat in retaliation for the expulsion of the US naval attache.
Mr Chavez accuses the Bush administration of trying to orchestrate his removal, a charge denied by Washington.