"The Dubai assassination is an act of state terrorism on the part of Israel," Foreign Ministry spokesman Ramin Mehmanparast said in a report by state-run Press TV.
"Israel's existence is itself based on terrorist activities," Mehmanparast said at his weekly news conference, according to the channel which translated his comments into English.
The spokesman described the assassination of the Palestinian militant as an "embarrassment for Europe."
Dubai has accused Israel of sending Mossad agents to the Gulf state to carry out the murder.
The emirate's police chief has named 11 suspects who travelled on European passports, six of them from Britain, three from Ireland, one from Germany and one from France.
Several of the suspects have joint Israeli nationality, and suspicion has fallen on Israeli intelligence, which is known to have carried out similar assassinations of Palestinian militant leaders in the past.
Diplomatic ties between Iran and Israel have deteriorated since hardline President Mahmoud Ahmadinejad came to power in 2005.
Israel has not ruled out military strikes against Iran's nuclear sites to stop its atomic program.