Speaking to Muslim Advocates, a San Francisco-based group, Holder told the group that he's heard from many Muslim and Arab Americans who feel uneasy and singled out by law enforcement.
The organization is one of several groups voicing concerns over hate crimes, alleged rights violations at the hands of law enforcement and the tactics used in anti-terrorism cases.
Carefully-crafted sting operations by FBI and Justice Department officials have included plots against a Portland, Ore., Christmas celebration, Dallas skyscrapers, Washington subways, a Chicago nightclub and New York's John F. Kennedy International Airport.
Undercover operatives in these cases have let suspects make clear they wanted to carry out an attack and gave them a chance to change their mind, according to authorities.
But Holder told the group he would make "no apologies" for the handling of the case against Mohamed Osman Mohamud, 19, a Somali-born Muslim accused of plotting to set off a bomb in Oregon.
"Those who characterize the FBI's activities in this case as 'entrapment' simply do not have their facts straight or do not have a full understanding of the law."
In that case, Mohamud has pleaded not guilty to charges of attempted murder of federal officers and attempted use of a weapon of mass destruction. After his arrest, someone set fire to an Islamic center where he occasionally worshipped.
Critics have called the stings entrapment of people who otherwise couldn't have carried out an attack and said the government has been enticing Muslims into terrorism.
"We have very serious concerns about FBI surveillance tactics that are used. We believe that law enforcement has an important job to protect us as a country but they should do so mindful of the rules of justice and fairness that are at the core of our criminal justice system," said Muslim Advocates executive director Farhana Khera, who invited Holder to speak to the group.
Despite the differences of opinion, Holder received strong applause and a standing ovation. Attendees said they felt reassured by his remarks on protecting the civil liberties of Muslim Americans.