"Violence is not the answer for either country," State Department spokeswoman Victoria Nuland insisted.
"We've been counseling both governments to de-escalate, to work through this issue, to continue the consultations between them at a high level that we understand are ongoing now."
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Pakistan has insisted no such incident had taken place in the disputed Kashmir region and suggested a UN inquiry be held.
But India has denounced the "inhuman" treatment of the two soldiers killed two days after a Pakistani soldier was also slain in the area.
Tensions have blown up along the Line of Control, the de facto border in Kashmir, over the past week with the two incidents again highlighting the six-decade long dispute over the Himalayan region.
Washington has been working through its embassies in both countries to calm tensions, and urging both governments to talk to each other, Nuland said.
The UN observer force in Kashmir is investigating an incident in which Pakistan said one of its soldiers was killed, UN spokesman Martin Nesirky told reporters in New York. But he added no complaint has been made about the clash in which India alleged one of its soldiers was beheaded.
Nuland said that if both sides "can work it out themselves, that's obviously best. If both parties were interested in support from the UN... we'd obviously support that as well."
