Clashes between security forces and supporters of democratically elected President Mohammed Morsi in eastern Cairo early Saturday left at least 65 protesters dead. The Islamist-led protests over Morsi's removal earlier this month followed nationwide rallies on Friday that drew millions in support of military-backed authorities.
In 2011 a revolution ended Mubarak's rule and brought Morsi to power last year as Egypt's first democratically elected leader. Military authorities toppled Morsi last month, calling into question the future of democracy in Egypt and the nature of the U.S.-Egyptian partnership in the region.
The U.S. has not taken sides but for weeks has called for peaceful protests and calm responses.
The Obama administration has avoided defining the ouster of Morsi as a coup. Under federal law, U.S. assistance must be suspended if a country's democratic government is overthrown by military force. Egypt received $1.5 billion a year in aid from the U.S., nearly all of it for the military.
"This is a pivotal moment for Egypt," Kerry said in a statement. "Over two years ago, a revolution began. Its final verdict is not yet decided, but it will be forever impacted by what happens right now. In this extremely volatile environment, Egyptian authorities have a moral and legal obligation to respect the right of peaceful assembly and freedom of expression.
Both are essential components of the inclusive democratic process they have publicly embraced."
Kerry said the continued violence sets back efforts of "reconciliation and democratization," and affects regional stability. The U.S. is urging "an independent and impartial inquiry" and that political leaders must help their country "take a step back from the brink," he said.
"A meaningful political dialogue, for which interim government officials have themselves called, requires participants who represent all the political parts of Egyptian society," Kerry said. "To enable such a dialogue, the United States reiterates our call for an end to politicized detentions and the release of political leaders consistent with the law."
On Saturday, Defense Secretary Chuck Hagel spoke by phone with Egypt's defense minister to express deep concern over the violence and to encourage restraint, a Pentagon spokesman said.