Clinton said President Barack Obama has had to take a new tack after his predecessor George W. Bush's efforts to isolate such leaders only made them "more negative" toward Washington and receptive to other powers.
"I don't think in today's world … that it is in our interest to turn our back on countries in our own hemisphere," Clinton told diplomats and other State Department staff.
She described the new world as "a multipolar world where we are competing for attention and relationships with at least the Russians, the Chinese, the Iranians," adding such countries can soon fill the void.
"If you look at the gains, particularly in Latin America, that Iran is making, that China is making, it's quite disturbing," the chief US diplomat said.
"They're building very strong economic and political connections with a lot of these leaders. I don't think that it's in our interests," Clinton said.
Her answer was prompted by concerns aired by a retired State Department official about the Obama administration's overtures toward Venezuelan President Hugo Chavez, an elected leftist-populist anti-US firebrand.
Clinton said the new administration was still exploring how to deal with such leaders.
"I'm certainly open to both constructive criticism and ideas," Clinton said after reviewing the overtures both she and President Obama made at the Summit of the Americas in Trinidad and Tobago earlier this month
"But we talked about exchanging ambassadors again with Chavez which I think we will do at some point," she said.
"We are looking at how to figure out how to deal with Ortega," she said referring to Nicaraguan President Daniel Ortega.
"The Iranians are building a huge embassy in Managua. And we can only imagine what it's for," she said.
"We want to try building better relationships with Correa," she said, referring to Ecuadoran President Rafael Correa. "And we want to see if we can figure out how to get an ambassador back and work with (Evo) Morales in Bolivia."
Obama and Chavez met at the opening of a 34-nation Americas summit and photos of the encounter showed the US leader smiling as he shook the Venezuelan's hand and patted him on the shoulder.
It was Obama's first encounter with the Venezuelan leader, which critics back home assailed as naiive and "irresponsible".
Obama hit back, saying: "It's unlikely that as a consequence of me shaking hands or having a polite conversation with Mr. Chavez that we are endangering the strategic interest of the United States."
But, he stressed he still had concerns about Venezuela and Chavez's often heated rhetoric.
Obama later downplayed his interaction with Chavez as not particularly unique, noting conversations with other US critics, including Nicaragua's Ortega and Bolivia's Morales.
