"There's been considerable progress in taking away from the Taliban safe havens," Gen. David Petraeus said in an interview with NATO TV aired on Wednesday.
"They have to fight back, they're losing momentum that's quite clear," he said. "They know they need to regain that momentum."
Last year's surge boosted the international force to about 150,000 troops. NATO and President Hamid Karzai hope to have more than 300,000 Afghan army and police in action by next autumn facing a much smaller organized insurgent force.
The Obama administration and NATO plan to begin reducing their troop contingent in July, and to end its combat role by the end of 2014.
Last year was the deadliest of the nearly decade-long war for international troops, with more than 700 killed. This compares to about 500 in 2009, previously the worst year of the war. Record numbers of insurgents and civilians also have been killed.
Insurgents killed two NATO service members in southern Afghanistan on Wednesday, bringing to 10 the number who have died so far this month
The conflict usually dies down during the winter, as the guerrillas retreat to their safe havens to rest and recuperate.
Petraeus said intelligence reports indicate that Taliban leaders are worried by the situation and that there is "friction and discord" between the guerrillas in the field and their leadership in Pakistan.
But analysts caution that the Taliban - in keeping with classic guerrilla strategy - have simply fallen back in the face of an overwhelming forces, dispersing into other, safer parts of the country. They are likely to remain on the defensive until NATO forces begin withdrawing in significant numbers.
The U.S. security think tank STRATFOR warned that because "this is a decisive point for the United States and its allies and because there is such immense pressure on commanders to show demonstrable progress, (talk) of progress must be viewed with considerable skepticism."
Petraeus also said he supported efforts by Karzai's government to reign in the nation's private security companies, which provide protection for a wide range of institutions and businesses in Afghanistan.
"In many cases these have become armed groups under the control of power-brokers," Petraeus said.
"They've actually been hijacked by these different powerful individuals as a source of funding, and they enable these individuals to maintain an alternative to the government forces."
U.S. officials say there are up to 40,000 armed security guards working in the country.
Karzai issued a decree in August ordering all such firms to be disbanded by Dec. 17. But a shortage of qualified police led to a deadline extension or exemptions in several cases, such as for companies protecting development and aid projects or diplomatic sites.