Blake made the remarks at a January 31 conference in Washington marking 20 years of Kazakh independence.
He said President Nursultan Nazarbaev, who has maintained authoritarian rule over the country for that entire period, "has the opportunity today to demonstrate the same farsighted leadership to build democracy that he showed in renouncing nuclear weapons."
"President Nazarbaev has often spoken about the three goals he set for his country when Kazakhstan became independent: to build a truly sovereign and independent state, to jump-start the economy, and to liberalize the political system," Blake said.
"Kazakhstan has advanced rapidly in pursuit of the first two goals, although the country still faces challenges with respect to economic diversification. But the third goal remains largely unmet, despite Kazakhstan's stated commitments to reform and to uphold human rights and democratic principles."
Although parliamentary elections on January 15 were dominated by Nazarbaev's Nur Otan party, they also resulted in the return of multiparty representation.
The two other political parties, Ak Zhol and the Communist People's Party, are pro-government.
Amid allegations of election fraud and criticism by OSCE monitors, the opposition Social Democratic Azat (Freedom) party failed to meet the threshold of support for parliamentary representation.
Blake said he hoped the lower house of parliament, or Mazhilis, would be more open and representative than in years past.
"We hope that Kazakhstan's newly elected, multiparty Mazhilis will shape a legislative process that reflects the needs and the desires of all Kazakhstani people," Blake said.
"Through transparency, lively debates, and public hearings, the Mazhilis can take bigger steps toward political openness by considering the opinions of all political factions and segments of society."
He also said a more "dynamic" political system and respect for freedom of assembly, religion, and the press would strengthen the country's relationship with the United States.
Kazakh Foreign Minister Yerzhan Kazykhanov also spoke at the event, calling the recent elections "a great achievement for a young country still learning the ropes."
The conference was funded by the government in Astana and oil giant Chevron.
Kazykhanov met with Daniel Poneman, the U.S. deputy secretary of energy, on January 30 and was due to meet with U.S. Secretary of State Hillary Clinton on February 1.
A recent report by pro-democracy group Freedom House said liberties in Kazakhstan have deteriorated in the past year. It cited a new law restricting religious beliefs and a December crackdown on striking oil workers in the west of the country.
The authorities' deadly response to the riots in Zhanaozen was heavily criticized in international media, and a government investigation was launched.
Kazykhanov said the inquiry was both "independent and comprehensive."
"We recognize that a full understanding of these events can yield important lessons for the government and help contribute to more effective policy-making and governance in the future," Kazykhanov said.
Attempts by government opponents to carry out their own investigation have been stymied. Despite the government's stated openness to an international investigation, none has been conducted.
Speaking to RFE/RL, Kazakh Deputy Foreign Minister Kairat Umarov said the government's need to stabilize the situation didn't allow for unfettered access to the area for all Kazakhs.
He also said that although Astana had requested a visit from UN investigators, the thoroughness of the government's own investigation means "the urgent necessity of someone coming from outside is less than it was."