Kerry made the comments in a speech Sunday via satellite from London to a foreign policy conference in California by the American Israel Public Affairs Committee, the most powerful pro-Israel lobbying organization in the United States.
The State Department released excerpts of Kerry's prepared remarks.
Earlier Sunday, Kerry and European Union's foreign policy chief, Catherine Ashton, held talks on Iran, Syria, Egypt, the Mideast peace process and other matters.
The focus on Iran's number program comes before the start of negotiations between the Islamic Republic and the five permanent U.N. Security Council members and Germany that are set for Tuesday and Wednesday in Geneva.
"Right now, the window for diplomacy is cracking open. But I want you to know that our eyes are open, too," Kerry said in his remarks to AIPAC.
Israel views a nuclear-armed Iran as a threat to its existence. Iran says its nuclear program is for peaceful purposes.
"While we seek a peaceful resolution to Iran's nuclear program, words must be matched with actions. In any engagement with Iran, we are mindful of Israel's security needs. We are mindful of the need for certainty, transparency, and accountability in the process. And I believe firmly that no deal is better than a bad deal," according to the excerpts of Kerry's speech.
International penalties over Iran's nuclear program have damaged Iran's economy, and Iran wants to ease them in exchange for some concessions. The West contends Iran is trying to make a nuclear weapon. Tehran says its program is for peaceful purposes.
Kerry and Ashton also discussed efforts to organize an international peace conference aimed at achieving a political transition in war-torn Syria.
The State Department said Kerry's session with Ashton was "very productive."