At least two people were killed and several wounded outside police headquarters in the port city of Chabahar when a suicide bomber blew up a vehicle.
Immediately after the bomber detonated the auto bomb, gunmen attempted to storm the police headquarters but were killed by security forces, Iranian media reported.
Mohammad Mehran Aminifar, head of Medical Sciences University in Zahedan, the capital of southeastern Sistan and Baluchistan province, told state TV that 42 people were wounded, including four kids and a pregnant woman.
The top Iranian diplomat took to his Twitter page on Thursday to react to the vehicle bomb attack, which he said was perpetrated by "foreign-backed terrorists".
State authorities did not identify who was behind the attack.
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The so-called Ansar al-Furqan terrorist group later claimed responsibility for the assault.
Sistan-Baluchistan province, where the bombing hit, has always been a flashpoint, with a number of attacks reported in recent past.
Images posted online showed thick smoke rising from the sky in the area where the incident took place. Middle East Eye could not verify the authenticity of the videos.
Rahmdel Bameri, Chabahar's acting governor, was among the Iranian officials who said two victims were killed by the December 6 car-bomb attack.
Chabahar is a free trade zone and the site of an Indian-backed port complex which is being developed as part of a new transportation corridor for land-locked Afghanistan.
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Iran also says that militant groups are sheltering across the border in Pakistan and has threatened to attack their bases if Islamabad does not confront them.
Suicide attacks are rare in Iran. The perpetrators behind this dastardly attack should be brought to justice expeditiously. Arab separatists and the Islamic State group both claimed the assault.
Tehran often blames the United States, Saudi Arabia and Israel for backing groups to destabilize Iran, something its rivals deny.
India has said it is ready to invest up to $500m in the development of the port that is key to its ambitions to chart a route to landlocked Central Asian countries and Afghanistan, bypassing Pakistan.
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