But he said it was unlikely "in the foreseeable future" Australian cities would be protected by the system.
VIDEO: Downer in the US
Japan's Nikkei business daily newspaper reported this week that Australia, Japan and the US had agreed at a meeting in Tokyo last month on a joint research framework for a system.
Mr Downer, speaking today in California alongside US Secretary of State Condoleezza Rice, said Australia supported the concept of the missile defence system.
He noted North Korea was developing long range missiles.
Asked if it was realistic Australia would have missiles guarding its cities in the near future, Mr Downer replied he did not "think that's likely any time in the foreseeable future".
"We do support the concept of missile defence and we do work with our friends and allies on that issue," he said.
The pair answered questions from the media and invited guests at an event at LA's Ronald Reagan Presidential Library.
"We have never made a secret of that."
Mr Downer said in years to come if there was a threat, Australia could deploy a missile defence system to protect itself.
"We are not likely to deploy such a system in Australia in the imaginable future, but I suppose way off who knows what strategic circumstances there could be," he said.
"There are not the strategic circumstances where we feel we would need it ourselves at this stage."
"Others, including the US, their need for it, is entirely understandable, and we are happy to work with them," he said.
"You have countries like North Korea developing long range missiles … and where you have other countries doing research and developing ballistic missile systems."
"I say, well sometimes they object to missile defence, but there is no need for missile defence if nobody has missiles that could be threatening."