Anonymous sources told CNN that al-Qaida leaders Osama bin Laden and Ayman al-Zawahiri were living in relative comfort in northern Pakistan, though the two leaders were separated.
"Nobody in al-Qaida is living in a cave," a NATO official told the new agency.
The news comes as Washington and Islamabad sat down for their third strategic dialogue session. The broader theme is expected to focus on U.S. financial support for Pakistan's security operations.
Frank Ruggiero, the U.S. deputy special envoy to Afghanistan and Pakistan, said Islamabad was taking on its fair share of the counter-terrorism fight in the region.
"I think that they have provided good cooperation in the U.S. fight against al-Qaida in terms of weakening the leadership structure of that organization (and) against the Pakistani Taliban, which was linked to terrorist attacks in New York City," he said in a briefing with reporters.
The Pakistani Taliban claimed responsibility for a failed bombing attempt in New York in May.
Ruggiero, however, suggested Islamabad could do more to address concerns about the whereabouts of key terrorism leaders such as bin Laden and Zawahiri.
"We have raised this issue with the government of Pakistan on many occasions," he said. "We will continue to do so."