Modi and Tajik President Emomali Rahamon also agreed to step up defence cooperation as the Indian leader reiterated the country's commitment to supporting the development of Tajikistan's defence capacities to enhance stability and security.
Boosting trade and investment and connectivity were the other major issues of the talks that the two leaders held as part of efforts to take their ties to newer heights.
The two sides signed two agreements in the fields of culture and skill development. A bust of Rabindranath Tagore was also unveiled by the two leaders.
"We are located in the proximity of the main source of terrorism," Modi said after the talks at a joint media appearance with Rahamon.
Though he did not elaborate, the reference was clearly to Pakistan and Afghanistan which are seen as the countries from where international terror emanates.
"Combating terrorism and extremism has always been an important and productive area of cooperation.. At a time of growing threat of terrorism, we have resolved to intensify our cooperation further," said Modi, who was here on the last leg of his eight-day six-nation tour.
A joint statement issued later said "The two leaders noted the rising trend of extremism and terrorism in many parts of the world and in their immediate neighbourhood, posing a threat to India and Tajikistan as well as the region."
They decided to reinvigorate official-level interactions in the framework of the Joint Working Group (JWG) on Counter Terrorism for strengthening cooperation in the fight against terrorism and instructed that the JWG meet at an early date.
The leaders emphasized the need for continued cooperation between their security agencies including information sharing mechanisms to counter the growing menace of extremism and terrorism, the statement added.
Both sides further emphasized the need for adoption of the long-pending "Comprehensive Convention on International Terrorism" by the UN.
Underlining the importance of a stable and secure environment for economic development and prosperity of their countries, the two sides agreed to continue their active engagement and cooperation in the fight against terrorism and extremism. They reaffirmed their determination to act resolutely against organizations and agencies that support terrorism.