U.S. Secretary of State Hillary Clinton said on Friday that Washington would begin the process of swapping ambassadors with Burma.
"In consultation with members of Congress, and at the direction of President [Barack] Obama, we will start the process of exchanging ambassadors with Burma," she said.
Clinton was speaking just hours after the Burmese authorities took the decision to release large numbers of political prisoners.
"An American ambassador will help strengthen our efforts to support the historic and promising steps that are now unfolding,” Clinton added.
President Obama called the move a "substantial step forward".
Burma was governed by a military junta since 1962, but has been ruled by a nominally civilian government for the last 22 months. The prisoner release is the latest in a series of steps which has seen the country move closer to rejoining the international community.