Obama administration officials had warned Libya not to make a hero out of Megrahi, who was freed by Scottish officials because he is said to be near death from prostate cancer.
They are seething over television footage showing the former Libyan intelligence agent being cheered by a flag-waving crowd and showered with flower petals on his late-Thursday arrival in Tripoli.
President Barack Obama, in brief comments to reporters, called the greeting highly objectionable while his spokesman Robert Gibbs was more emphatic, describing the airport scene as outrageous and disgusting.
Senior administration officials had pressed leaders of Britain and the Scottish regional government not to free Megrahi, who had served eight years of a life sentence for the 1988 bombing of a Pan Am jumbo jet over Lockerbie Scotland that killed 270 people.
They have said that while they object to the decision to free Megrahi on compassionate grounds, they accept the legitimacy of the court and are contemplating no retaliatory move against key ally Britain.
However they say the treatment of Megrahi by Libya could have consequences for a U.S.-Libyan relationship that has improved markedly since Libya renounced terrorism and weapons of mass destruction in 2003.
State Department Spokesman Ian Kelly said Friday the images of the welcome given to what he termed a mass murderer were personally offensive, and that he could only imagine how relatives of the Pan Am victims felt. He said they call into question promises Libya has made in recent years to change its ways.
"Libya has made every indication to us that they want to put this in the past, their connections with terrorism. So I think we're going to be watching very closely in the days and weeks ahead to see that indeed they do want to put these kinds of incidents in the past. And I think that celebrating this man who was convicted in a court of law as a terrorist would, of course, cause us to question that they do indeed want to move to a new phase in our relationship," he said.
Kelly said the airport event in itself would not bring any punitive U.S. action but that administration officials will closely monitor the treatment of Megrahi to see if, among other things, Libya abides by President Obama's call Thursday that he be put under house arrest.
The spokesman said Assistant Secretary of State for Near Eastern Affairs Jeffrey Feltman called in Libya's ambassador to Washington to the State Department late Thursday to directly express U.S. concern.