A senior commander in Iran's Revolutionary Guards said Tehran would not withdraw its forces from the region, dismissing USA calls that Iranian regional influence should be curbed.
Ceremonies were held across Iran today to observe the anniversary of the fall of the Shah and the triumph of Ayatollah Ruhollah Khomeini, the Shiite cleric who led the coup.
Earlier this month the USA vowed to pressure Iran to curtail its missile program after the Islamic Republic unveiled a new ballistic missile with a range of 1,000 kilometers (620 miles) and tested a new cruise missile, both capable of reaching targets in Israel.
"I bow in admiration to Iran's resilient people who - despite hardships and grievances - today poured into streets by the millions to mark 40th anniv of their Islamic Revolution, which some in the U.S. wished would never come", Iranian Foreign Minister Mohammad Javad Zarif tweeted.
In a speech marking the 40th anniversary of the Islamic Revolution in Tehran, Rouhani said: "47 years ago, which is seven years before the Islamic Revolution during the reign of the traitor Pahlavi regime, an important part of southern Iran separated, and we have read that geographically it was a part of Iran, and its 14th province".
Stalls set up by state institutions handed out tea and cakes and choirs sang revolutionary songs, as crowds massed despite driving rain.
According to Channel 12 news, the factory is meant to focus on producing precision missiles, dramatically upgrading the threat to Israel from the vast arsenal of rockets and missiles deployed against it in southern Lebanon by Iran's proxy, Hezbollah.
Chants of "Death to Israel" and "Death to Britain" followed, and demonstrators burned USA and Israeli flags.More news: Russian islands declare emergency over polar bear `invasion`
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"40 years of corruption".
Although the Iranian government has attempted to establish financial mechanisms that would facilitate its trade relations with European powers, its ability to trade internationally has been badly affected by renewed United States sanctions.
The large turnout in state-sponsored rallies, in which U.S. and Israeli flags were burned, came as Iranians face mounting economic hardships which many blame on the country's clerical leaders.
Iranians march towards Azadi Square during Monday's rally.
Banners held by marchers or hung along the streets bore slogans including "Death to America", "Death to Israel", "we will trample on America", "forty years of challenge, forty years of United States defeats".
An anchor on state television warned of hostile foreign media trying to downplay the participation of Iranians in the march but expressed confidence that "they would be confounded by the unprecedented level of attendance".
Former public servant Saaghi insisted that it remained paramount for Iranians to stick by the revolution. He was greeted by millions of supporters in Tehran. Unlike many other news organizations, we have not put up a paywall.
"At the revolution's 40 anniversary we are on top of scientific achievements like nanotechnology or accurate missiles", he said.