The family of Vang Pao, a former Laotian general and leader of the Hmong ethnic group, said it was "disgraceful" that the US Army did not allow the key American ally in the Vietnam War to be buried at Arlington National Cemetery in Washington.
In a statement, the family said the denial was a lesson in how President Barack Obama's administration honoured America's allies.
General Vang, who commanded CIA-funded guerrillas that fought alongside US special forces, is revered as a leader by the Hmong. He helped thousands of them to find refuge overseas after Saigon fell and the communist government in neighbouring Laos moved to punish the ethnic minority for disloyalty during the conflict.
On Saturday – the second day of a six-day funeral – General Vang's extended family including his 25 surviving children, an exiled member of the Lao royal family and former CIA officials, followed his flag-draped coffin through packed streets of Fresno.
Two California congressmen submitted the request that General Vang be buried in Arlington shortly after he died aged 81 last month. They said he should be buried alongside the American soldiers he fought with.
John McHugh, the Secretary of the US Army, said the request was turned down after a unanimous recommendation from a board of military and civilian officials.