Karzai said this week that he was prepared to walk away from negotiations on the Bilateral Security Agreement (BSA) that would allow some US troops to stay in the country after 2014.
But the US has pressed for the pact to be signed within weeks so that the US-led NATO military coalition can schedule its withdrawal of 87,000 combat troops by December 2014.
"The tone was constructive throughout the entire conversation," a US official told reporters after meetings late yesterday. "It is fair to say that the differences that exist were narrowed on the vast of majority of the outstanding issues."
The Afghan leader has previously said the sticking points were US demands for the right to conduct unilateral military operations against militants, and on how the US would pledge to protect Afghanistan.
The talks between Kerry and Karzai came as the US said it had captured a senior leader of the Pakistani Taliban, Latif Mehsud, who is being held in Afghanistan.
Karzai has said he refuses to be rushed into signing any BSA deal, and would first seek approval from a traditional grand assembly of tribal leaders to be convened in about month's time.
Afghan officials dismiss the possibility that the US may enact the "zero option" of a complete pull-out after its soldiers have fought the Taliban since the 9/11 attacks in 2001.
The Afghan leader has had a tempestuous relationship with the US and other foreign allies since he came to power in 2001, often sparking outrage with his criticism of international military efforts to thwart the Taliban insurgents.
"The entire NATO exercise was one that caused Afghanistan a lot of suffering, a lot of loss of life, and no gains," he said this week.
Karzai officially suspended BSA talks in June in a furious reaction to Taliban opening a liaison office in Qatar that was presented as an embassy for a government in waiting.
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