The opposition announced plans for street protests after Sunday's vote in the ex-Soviet country handed victory to the ruling party backing President Ilham Aliyev, though analysts ruled out any Ukraine-style revolution.
"We note the irregularities," said a State Department official who asked to remain anonymous because the government was set to issue a formal statement later on Monday.
"Adherence to democratic principles is important to us and does impact the bilateral relationship. The depth of the relationship is going to go forward as democratic and political reforms advance in the country," he said.
Riot police were on stand-by in Baku as a 600-strong observer team from the Organisation for Security and Co-operation in Europe gave its critical report on the election.
There were no reports of violence. The first opposition protest is scheduled for Wednesday.
"The shortcomings that were observed, particularly during election day, have led us to conclude that the election did not meet Azerbaijan's international commitments on elections," said Alcee L. Hastings, head of the OSCE's observer mission.
His words were softened by an OSCE statement that pointed out some improvements in the way the vote had been conducted.
With 90 percent of the vote counted, President Aliyev loyalists had a huge majority in the 125-seat parliament.
European Union External Affairs Commissioner Benita Ferrero-Waldner joined the criticism.
"It is disappointing that there appear to have been significant shortcomings on the election day," she said, adding though that there had been some welcome improvements in the election process too.
Aliyev leads a country of 8 million Muslims wedged between Russia and Iran. Corruption is endemic and the country has yet to hold an election judged free and fair by the West. But Aliyev had shown signs of moving towards gradual reform.
An Azadlyq leader said Western criticism would help the bloc's cause. "People will have hope that the results of these elections can be overturned and our struggle will be given new impetus," Ali Kerimli told Reuters.
There was a sign officials might heed Western criticism when Central Election Commission chairman Mazahir Panahov said the results in 10 constituencies would be reviewed "as they were disputable and did not reflect the will of the people."
But he said a US government-funded exit poll, which confirmed the official result apart from a handful of discrepancies, showed the vote was broadly fair.
"It is very strange to talk about our elections not meeting international standards as our results coincided with the results of the (exit poll) 85 percent of the time," Panahov told a news briefing.
Analysts said the defeated opposition was too weak to repeat Ukraine's "Orange Revolution", though many Aliyev opponents wore orange in imitation of the peaceful uprising that ousted the Ukrainian ruling elite in December 2004.
Helped by windfall revenues from its oil exports, the Baku government pays wages and pensions on time and the economy is growing, cushioning Aliyev's administration against discontent.