"This action is inconsistent with the bilateral cooperation we have had over many years," Nuland told reporters in Washington.
"We call on the Egyptian government to immediately end the harassment of NGO staff, return all property and resolve this issue immediately," she said.
Nuland said the US ambassador in Cairo, Anne Patterson, raised her concerns with the Egyptian prime minister, and the assistant secretary of state for Near East Affairs, Jeff Feltman, raised the issue with Egypt's envoy to the US.
The Washington-based IRI earlier said it was "dismayed and disappointed by these actions."
"IRI has been working with Egyptians since 2005; it is ironic that even during the Mubarak era IRI was not subjected to such aggressive action," it said.
Police special forces blocked the entrance to the NDI offices in a Cairo villa as men in plain clothes, some of them members of the prosecution service, carried out computers and boxes full of files, an AFP correspondent said.
In a statement, the NDI said it was "deeply troubled" by raids on its offices in Cairo, Alexandria and Assiut.
It confirmed it was helping to observe parliamentary elections in Egypt, and said police seized "NDI’s equipment and documents, sealed the office, and provided no warrant or explanation for their actions."
IRI called the raid "confusing" because Egypt's government, backed by military rulers tasked with steering the country toward democracy, had officially asked it to witness the elections.
Having deployed monitors for the first two phases of elections, it said, the IRI was in the process of deploying a high-level international delegation to observe the third phase on January 3 and 4.
The Egyptian state prosecutor's office said in a statement that a team of investigators from the prosecution service was searching "17 headquarters of branches of Egyptian and foreign civil society groups."
They were carrying out an order from judges the justice ministry had tasked with investigating the groups' foreign funding, after obtaining "serious evidence of their engaging in illegal activities," the statement said.
The groups allegedly did not obtain licences to operate or permission from the foreign and social solidarity ministries, the statement added.
Civil society groups condemned the unprecedented raids.
"Mubarak's regime did not dare to undertake such practices prior to the uprising," said the Arabic Network for Human Rights Information in a statement.
It accused the authorities of "aiming to intimidate activists and rights advocates, gag their mouths and freeze their activities in support of human rights and against repression and torture."
Mohammed ElBaradei, the former UN nuclear watchdog chief and possible presidential candidate, also denounced the raids.
"Human rights organisations are the guardians of nascent freedom. Efforts to suffocate them will be a major setback and will surely backfire," he wrote on Twitter.
The probe, which began over the summer, coincided with Washington raising concerns with the ruling military about "anti-Americanism" in Egypt.
A cabinet source told AFP that the investigation was first launched in July after Ambassador Patterson said the US distributed $40 million (35 million euros) to NGOs since Mubarak's ouster.
The initial probe came amid a spike in tensions between the military and activists who want a speedier transition to civilian rule.
Egypt's military leaders have described the activists as foreign-funded, an accusation that resonated in a country where there is abundant suspicion of foreign plots.
The military has traditionally enjoyed close ties with Washington and receives more than $1 billion in US aid annually.