Blinken, on his third trip to the region since the conflict erupted nearly eight weeks ago, also stressed it was "imperative" to protect civilians in the besieged Gaza Strip should the fighting resume.
He made the remarks in meetings with Israeli President Isaac Herzog and Prime Minister Benjamin Netanyahu in Tel Aviv and Jerusalem, respectively, before travelling to Ramallah in the occupied West Bank for a sit-down with Palestinian president Mahmud Abbas.
As part of the pause in fighting, now in its seventh day, Hamas has freed scores of hostages taken during its bloody attack on Israel on October 7 in exchange for the release of more than 200 Palestinian prisoners being held in Israeli jails.
"We have seen over the last week the very positive development of hostages coming home, being reunited with their families," Blinken said in his meeting with Herzog.
"It's also enabled an increase in humanitarian assistance to go to innocent civilians in Gaza who need it desperately.
"So this process is producing results. It's important, and we hope that it can continue."
The truce was extended by one day on Thursday and is due to expire on Friday morning if an agreement is not reached on a further prolongation.
'Avoid civilian harm'
In his meeting with Netanyahu, Blinken reaffirmed Israel's right to defend itself, but urged it "to take every possible measure to avoid civilian harm", State Department spokesman Matthew Miller said in a statement.
"The secretary stressed the imperative of accounting for humanitarian and civilian protection needs in southern Gaza before any military operations there and urged immediate steps to hold settler extremists accountable for violence against Palestinians in the West Bank," he added.
In a statement released by his office, Netanyahu said he had raised with Blinken a shooting attack that killed three people in Jerusalem on Thursday and was later claimed by Hamas, saying "nothing will stop us" from destroying the group.
"We will continue this war until we achieve the three goals: Freeing all of our hostages, completely eliminating Hamas and ensuring that no threat like this will ever come from Gaza again," he said.
After the meeting, Blinken travelled by armoured convoy to the headquarters of the Palestinian Authority in Ramallah for talks with Abbas.
The two "spoke about the urgent need for measures to improve security and freedom for Palestinians in the West Bank", Miller said in a separate statement, with Blinken reiterating "that the United States remains committed to advancing tangible steps for a Palestinian state".
Since the October 7 attack on Israel and its ensuing war against Hamas in Gaza, violence in the West Bank has flared, with nearly 240 Palestinians killed by Israeli soldiers or settlers, according to the Palestinian health ministry.
Before he arrived, Blinken had said his trip would focus on extending the truce between Israel and Hamas to ensure the release of more hostages and the continued delivery of aid into Gaza.
