"It hurts me and it will go to my grave that I made a huge, huge mistake that made a lot of people think I was against the soldiers," she said of the 1972 picture on Saturday.
The actress and workout guru, 77, drew a crowd of protesters to her public appearance in Maryland. The crowd included 50 military veterans, according to the Hollywood Reporter, and many carried signs saying: "Forgive? Maybe. Forget? Never."
"Whenever possible I try to sit down with vets and talk with them, because I understand and it makes me sad," Fonda said.
"I'm a lightning rod," she added. "This famous person goes and does something that looks like I’m against the troops, which wasn’t true, but it looked that way, and I’m a convenient target. So, I understand."
Fonda previously clarified her position on the Vietnam war in 2011 in a Huffington Post blog, saying that critics "perpetuate the myth that being anti-war means being anti-soldier."
Local paper the Frederick News-Post reported that Fonda said she did not regret her time in Vietnam, saying it was an "incredible experience".