Mr Holder said there were circumstances under which "an operation using lethal force in a foreign country, targeted against a US citizen who is a senior operational leader of al-Qaeda or associated forces, and who is actively engaged in planning to kill Americans, would be lawful."
Such circumstances included that a thorough review had determined the individual posed "an imminent threat of violent attack against the United States" and that "capture is not feasible."
Thirdly, the "operation would be conducted in a manner consistent with applicable law of war principles," Mr Holder told the audience at the Northwestern University School of Law.
"Some have called such operations 'assassinations.' They are not... assassinations are unlawful killings," Mr Holder said.
"Our legal authority is not limited to the battlefield in Afghanistan... We are at war with a stateless enemy, prone to shifting operations from country to country," he added.
"Our government has both a responsibility and a right to protect this nation and its people from such threats."
Civil rights groups have cried foul since the killing of Awlaki in Yemen in September in a US raid.
Some argued it was illegal for the US military to kill an American citizen on the battlefield, following no attempt to indict him.
US intelligence officials believed Awlaki was linked to a US army major charged with shooting dead 13 people in 2009 in Fort Hood, Texas, and to a Nigerian student accused of trying to blow up a US airliner on December 25, 2009.
President Barack Obama said in September that Awlaki's killing was a "major blow" to Al-Qaeda's Yemeni branch, and marked "another significant milestone in the broader effort to defeat al-Qaeda and its affiliates."
The American Civil Liberties Union (ACLU) last month filed a lawsuit seeking the release of documents authorizing targeted drone strikes.
US citizen Samir Khan was killed in the same attack on Awlaki, and the cleric's US-born teenage son was killed in October in a separate strike in Yemen.