US President Barack Obama on Tuesday nominated America's first ambassador to Somalia since 1991, when ties soured as rival warlords took over the African nation.
Katherine Dhanani, a long-time diplomat with deep experience of African affairs, will have to be confirmed by the Senate for the role in Somalia, where extremists have targeted government officials in a bloody campaign.
The State Department welcomed the move as "historic" and said it "signals the deepening relationship" between the two countries after they launched a new era of diplomatic relations in 2013.
If confirmed, Dhanani will lead the US mission to Somalia, which is currently based at the US embassy in Nairobi, said State Department spokeswoman Jen Psaki.
"As security conditions permit, we look forward to increasing our diplomatic presence in Somalia and eventually reopening the US embassy in Mogadishu."
The darkest chapter in US-Somali ties came in 1993 when Americans were anguished by scenes of the bodies of US soldiers being dragged through the streets of Mogadishu by a mob after Somali militants shot down two Black Hawk helicopters.
Eighteen Americans died and 80 were wounded.
The Somali government that finally took power in August 2012 was the first to be given global recognition since the hardline regime fell in 1991, and billions of dollars in foreign aid have since poured in to help rebuild the Horn of Africa country.
The US recognized the new government in January 2013.
But security remains a major concern in the impoverished country.
Obama's announcement comes only days after Al-Qaeda-linked Shebab insurgents killed at least 25 people in an attack on a popular hotel in the capital Mogadishu where government ministers and officials were holding Friday prayers.
Psaki said the nomination "allows us to mark the progress of the Somali people toward emerging from decades of conflict."
"Somalia has considerable work ahead to complete its transition to a peaceful, democratic, and prosperous nation," she added in a statement.