Iran's Revolutionary Guards is holding the military exercise in Semnan province to test missile and radar systems and to "showcase the power of Iran's revolution and to dismiss the sanctions," according to the force's website.
Iran defied new US sanctions on its missile programme by holding a military exercise on Saturday.
"We are working day and night to protect Iran's security," head of Revolutionary Guards' aerospace unit, Brigadier General Amir Ali Hajizadeh was quoted as saying by Tasnim news agency.
"If we see the smallest misstep from the enemies, our roaring missiles will fall on their heads," he added.
Tensions between Tehran and Washington have risen since an Iranian ballistic missile test last week which prompted US President Donald Trump's administration to impose sanctions on individuals and entities linked to the Iranian Revolutionary Guards.
Trump's national security adviser Michael Flynn said Washington was putting Iran on notice over its "destabilising activity," and Trump tweeted Tehran was "playing with fire."
Dismissing Trump's comments that "nothing is off the table" in dealing with Tehran, the commander of Iran's ground forces said on Saturday that the Islamic Republic had heard such threats since its 1979 revolution.
"The defence capability and the offensive prowess of Iran's armed forces would make America or any other enemy regretful of any incursion," Deputy Commander-in-Chief of the Army of Iran Ahmad Reza Pourdastan was quoted as saying by the news organisation ISNA.