We're confident it can be achieved, and by the end of July deadline," David Satterfield told reporters in Baghdad's U.S.-guarded Green Zone.
The pact also would provide a legal basis for keeping American troops in Iraq after the U.N. mandate expires at the end of the year.
But tempering the optimism were recent reports in Iraq and Washington that the talks had stalled because of stiff Iraqi opposition, and it would not be finished before President Bush leaves office.
A senior Bush administration official close to the talks told The Associated Press on Monday that it was "very possible" the U.S. may have to extend the existing United Nations mandate.
Iran also has lashed out at the agreement, suggesting that if permanent U.S. military bases are established on Iraqi soil, the country could be used as a launching pad for attacks on the neighboring country.
Satterfield disputed that Tuesday, saying Washington "does not think Iraq should be an arena, a platform for attacks on other states."
"We want to see Iraqi sovereignty strengthened, not weakened," Satterfield told reporters.