Pakistan has defended separatist groups fighting against New Delhi's forces in Indian-controlled Kashmir.
Pakistan’s Foreign Ministry, in a statement issued on Tuesday, said the struggle by the separatist groups against the Indian rule was "legitimate."
"The 70-year-old indigenous struggle of Kashmiris in the Indian occupied Jammu and Kashmir remains legitimate. The designation of individuals supporting the Kashmiri right to self-determination as terrorists is completely unjustified," the statement said.
The US Department of State has designated Syed Salahuddin, the head of the Hizbul Mujahideen, a pro-independence group, as a so-called Specially Designated Global Terrorist.
Nafees Zakaria, the spokesman for Pakistan's foreign office, also said, "The designation of individuals supporting the Kashmiri right to self-determination as terrorists is completely unjustified."
According to the US State Department, American entities are banned from engaging in financial transactions with Salahuddin, and all his property in the United States is blocked.
The State Department said Salahuddin had threatened to train more Kashmiri bombers and vowed to turn the Kashmir valley "into a graveyard for Indian forces."
Salahuddin, who is from the town of Badgam in Indian-controlled Kashmir, was a politician who turned to armed struggle after he lost an election for the Kashmir legislative assembly in 1987, which he says was "massively rigged" by India.
Washington's decision came just days before Indian Prime Minister Narendra Modi visited the White House for his first talks with US President Donald Trump.
At the talks on Monday, Trump and Modi called on Pakistan to ensure that its territory was not used to launch terrorist attacks on other countries.
India regularly accuses Pakistan of arming and training militants and allowing them across the restive frontier in an attempt to launch attacks against Indian forces. Pakistan strongly denies the allegation.
Tensions between India and Pakistan have been running high over Kashmir.
In recent months, several people have been killed as Pakistani and Indian troops have traded gunfire at the de-facto border dividing Kashmir between the two neighbors.