Gen. Keith Alexander, who also heads the NSA, told gathered government and industry executives at a cybersecurity summit that roadblocks in sharing information about cyber threats and attacks.
"We can tell (banks and other businesses) how their systems went down and how bad they were hit, but if we can't share information with industry," Alexander said, meaning businesses can't learn from one another when one is attacked.
Legislation to allow such communication faces opposition from members of Congress concerned such an arrangement could undermine civil liberties.
Alexander also pushed for a more "defensible architecture" at the Defense Department compared to "the legacy architecture we have today," which "has a number of problems."
The idea that "having your information in 15,000 enclaves is somehow more defensible" is wrong, Alexander argued, in pushing for a central cloud-based computing environment which would make it easier to identify vulnerabilities, monitor activity and protect from attacks.
Alexander gave a full-throated defense of the NSA's use of phone records, a practice that has come under heavy fire since former analyst Edward Snowden leaked program documents.
"In the last week, over 950 people were killed in Kenya, Iraq, Yemen" and elsewhere as a result of attacks, he said. "We've been fortunate to have avoided that in the U.S., but it's not just because of luck."
He credited intelligence's data gathering and analysis with preventing at least 54 terrorist attacks in the U.S. and overseas since the Sept. 11, 2001 attacks.
"We're going to have a debate in this country on do we give up those tools," he said. "I'm concerned we're going to make the wrong choice."