Gunmen disguised as soldiers attacked an annual military parade in the southwest Iranian city of Ahvaz on Saturday, killing 25 and wounding dozens of people, state TV reported. 12 of those killed are reported to be members of Iran's Revolutionary Guards Corps, the semi-official Tasnim news agency said.
State television said the assault, which wounded more than 60 people, targeted a stand where Iranian officials were gathered to watch an annual event marking the start of the Islamic Republic's 1980-88 war with Iraq.
Iranian President Hassan Rohani ordered security forces to "use all their power" to identify military parade attackers, the ISNA news agency reported.
Early reports Saturday described the assailants as "Takifiri gunmen," a term previously used to describe the Islamic State group.
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An Iranian ethnic Arab opposition movement called the Ahvaz National Resistance claimed responsibility for the attack. All four attackers were killed. Islamic State militants also claimed responsibility. Neither claim provided evidence.
However, a spokesman for the Iranian military has since said the attackers were trained by two Gulf states, and are connected to Israel and the U.S.
"These terrorists... were trained and organised by two ... Gulf countries," Brigadier General Abolfazl Shekarchi told the official news agency IRNA.
"They are not from Daesh (Islamic State) or other groups fighting (Iran's) Islamic system ... but they are linked to America and (Israel's intelligence agency) Mossad."
Four militants carried out the attack and two of them were killed, according to the semi-official ISNA news agency. There has been no claim of responsibility for the attack.
An unnamed spokesman for the Revolutionary Guards blamed Arab nationalists, who he said were backed by Saudi Arabia, ISNA reported.
Iranian Foreign Minister Mohammad Javad Zarif has gone on Twitter blaming regional countries and their "U.S. masters" for the attack on the military parade.
Zarif also warned that "Iran will respond swiftly and decisively in defense of Iranian lives" after the attack in Ahvaz.
An anti-government Arab group, the Ahvaz National Resistance, was responsible for the attack, a spokesperson for the group told Reuters.
Yaghub Hur Totsari, spokesman for one of the two groups that identify themselves as the Arab Struggle Movement for the Liberation of Ahvaz, said the Ahvaz National Resistance, an umbrella organization of all armed movements, was behind the attack but did not specify which group.
Iran was holding similar parades in several cities including the capital Tehran and the port of Bandar Abbas on the Gulf.
"There are a number of non-military victims, including women and children who had come to watch the parade," IRNA quoted an unnamed official source as saying.
Ali Fadavi, a deputy Guards commander, said the attack was a continuation of the activities of Islamic State in Iraq and Syria.
"This terror act is not a sign of power, but one of weakness and a continuation of the actions of Daesh (Islamic State) in Iraq and Syria where they shoot innocent people," Fadavi was was quoted by the semi-official Fars news agency as saying.
The Islamic Revolutionary Guards Corp (IRGC) have been the sword and shield of Shi'ite clerical rule since Iran's 1979 Islamic Revolution. The Guards also play a major role in Iran's regional interests in countries such as Iraq, Syria and Yemen.
"Three of the terrorists were killed on the spot and a fourth one who was injured died in hospital," Brigadier General Abolfazl Shekarchi, a senior spokesman for Iran's armed forces, told state television.
A video distributed to Iranian media showed soldiers crawling on the ground as gunfire blazed in their direction. One soldier picked up a gun and got to his feet as women and children fled for their lives.
Ali Hosein Hoseinzadeh, deputy governor in Khuzestan province, was quoted as saying the death toll was expected to rise. One of those killed was a journalist.
The bloodshed struck a blow to security in OPEC oil producer Iran, which has been relatively stable compared with neighbouring Arab countries that have grappled with upheaval since the 2011 uprisings across the Middle East.
Tensions between traditional rivals Iran and Saudi Arabia have surged in recent years, with the two countries supporting opposite sides in wars in Syria and Yemen and rival political parties in Iraq and Lebanon.