Venezuelan authorities, including the vice president, have accused officials at the U.S. Embassy of involvement in a spying case in which several Venezuelan naval officers allegedly passed sensitive information to the Pentagon.
"I urge the Embassy of the United States in Venezuela to stop spying, we have you infiltrated ambassador, don't move much because we are watching you," said Chavez. "The military officers of the U.S. Embassy are involved in espionage and we have them infiltrated."
Chavez, who has accused U.S. President George W. Bush of backing efforts to overthrow his leftist government, threatened last week to arrest any American officials caught gathering intelligence on his military.
Officials from the U.S. Embassy in Caracas have declined comment on the espionage accusations, and the U.S. State Department has called the charges a domestic matter for Venezuela.
The allegations by Chavez, who didn't provide details during his speech on Monday, have increased tensions between Caracas and Washington.
Diplomatic relations have been strained due to U.S. concerns about the health of democracy under left-leaning Chavez and has accused the self-styled "revolutionary" of destabilizing the Latin America.
Chavez has shrugged off the claims, saying his government is fully democratic.
Since taking office in 1999, Chavez has forged increasingly close ties with communist-led Cuba and vowed establish a socialist economic model is this oil-rich-yet-poor South American nation of 26 million.
Opponents fear the former paratrooper is becoming authoritarian and steering Venezuela, the world's fifth largest oil exporter, toward Cuba-style communism.
"It's not about copying models, nobody should be scared," Chavez told an auditorium packed with business representatives and government supporters.