In a wide-ranging policy address to the Council on Foreign Relations, Clinton said the administration was "appalled" by Iran's recent postelection crackdown on protesters. She said the hard-line regime would face new penalties and increasing isolation over its nuclear program and support for extremists unless it soon took up the U.S. overture.
"We remain ready to engage with Iran, but the time for action is now," she said. "The opportunity will not remain open indefinitely."
Clinton did not set a deadline, but President Barack Obama said last week that the U.S. wants to see a positive response by the fall or it will press for additional bilateral and United Nations sanctions.
"Neither the president nor I have any illusions that dialogue with the Islamic Republic will guarantee success of any kind and the prospects have certainly shifted in the weeks since the election," Clinton said. "But we also understand the importance of trying to engage Iran and offering its leaders a clear choice: whether to join the international community as a responsible member or to continue down a path to further isolation."
In the speech, which marked her return to a full public schedule after having been sidelined with an elbow injury for the last month, Clinton defended the administration's outreach to Iran and other past adversaries, such as Syria.
"We cannot be afraid or unwilling to engage," she said. "Our focus on diplomacy and development is not an alternative to our national security arsenal."
Noting Syria's close ties with Iran, she said: "I am hoping that the Syrian calculation ... will be changing so that we can pursue a two-way engagement."
Clinton also called on Arab states to live up to their stated support of a Saudi proposal for a comprehensive Arab-Israeli peace by supporting the weak Palestinian Authority and taking "steps to improve relations with Israel."