Relations began to warm after Libya gave up its weapons of mass destruction program in 2003, but Rice held back on visiting the former pariah state until a compensation package was signed last month to cover legal claims involving victims of U.S. and Libyan bombings.
In her brief trip, Rice is set to meet Libyan leader Muammar Gaddafi and share Iftar with him—the meal for breaking the fast during the Muslim holy month of Ramadan.
Once called "the mad dog of the Middle East" by President Ronald Reagan, U.S. officials said Rice was looking forward to the encounter with Gaddafi and planned, among other issues, to raise human rights concerns as well as regional conflicts in Chad, Sudan and the recent coup in Mauritania.
Her spokesman Sean McCormack called the trip to Libya a "historic stop". The last secretary of state to go there was John Foster Dulles in May 1953, before Rice was even born.
Rice, who is going to Libya after an overnight stop in Lisbon, Portugal, is also expected to push Gaddafi on the compensation deal signed on August 14.
No funds have been paid into it yet but lead U.S. negotiator with Libya, David Welch, said he was optimistic it would happen soon.
Libya finalized legalities to set up the fund on Wednesday and one senior U.S. official said it would take "more than days" before enough money was in the account and payments could be made to both sides.
No Money in Fund
No details have been given over who will put money into the fund or how much it will amount to but outstanding legal claims could run into billions.
U.S. victims covered include those who died in the 1988 bombing of Pan Am Flight 103 over Lockerbie, Scotland, which killed 270 people, and the 1986 attack on a Berlin disco that killed three people and wounded 229.
It also compensates Libyans killed in 1986 when U.S. planes bombed Tripoli and Benghazi. Forty people died.
Rice has come under some domestic U.S. criticism for making the trip before the money was paid out. Rights groups are also critical because some cases, including that of ailing political dissident Fathi el-Jahmi, have not been resolved despite U.S. pressure.
Jahmi's brother Mohamed El-Jahmi, who lives in the United States near Boston, said Rice was wrong to see Gaddafi while his brother, a former provincial governor, was held in a "bugged, cockroach-ridden" hospital room and his family had very limited access to him.
Democratic vice presidential candidate Sen. Joe Biden has personally taken up Jahmi's case and Mohamed el-Jahmi said he hoped Rice would follow the senator's lead and do the same.
"The secretary of state is now going to provide legitimacy to a dictator. She knows fully that my brother could be killed," he told Reuters.
Rice may sign a trade and investment deal during her visit but experts say the main message is to signal a new era in U.S.-Libyan relations that have been marked by decades of mistrust and violence.
After going to Tripoli, Rice is set to visit Tunisia, Algeria and Morocco before returning to Washington on September 7.
