An AFP correspondent said that some 2,000 people thronged the house in an affluent north Tehran neighborhood of Massoud Ali Mohammadi, who died Tuesday when a booby-trapped motorbike exploded as he was leaving home.
Around 100 policemen were deployed in the area.
Relatives and members of the elite Revolutionary Guards placed the body of Ali Mohammadi, a particle physics professor at prestigious Tehran University, in an ambulance which then took off for the burial at a nearby shrine.
A military marching band led the procession to the shrine, followed by hundreds of mourners many of whom were chanting "Death to Israel" and "Death to America."
Mourners also chanted slogans against the so-called "hypocrites" -- the Islamic republic's term for the outlawed People's Mujahedeen.
Some chanted, "Nuclear energy is our undeniable right" in an allusion to accusations by Iranian officials the killing was an attempt by Western powers to disrupt Iran's controversial nuclear program.
People close to Ali Mohammadi have stressed his close links with the elite Revolutionary Guards, where he seems to have worked for more than 20 years until 2003.
Neither the police nor the intelligence services have yet reported any leads in their investigation but several top officials have pointed an accusing finger at the CIA and Israel's Mossad spy agency.
Massoud Ali Mohammadi's funeral (Photo: AP)
On Thursday the media advisor to President Mahmoud Ahmadinejad told AFP that the United States, Britain and Israel were "high on the list of suspects."
"Our security and intelligence apparatus are pursuing those behind the blast to bring them to justice as soon as possible," said Ali Akbar Javanfekr.
"America, Britain and Israel have the most animosity towards our scientific progress, especially the nuclear program, so when our scientists are targeted they become high on the list of suspects," he said.
Similar allegations by other Iranian officials of US involvement in the attack have been dismissed out of hand by Washington.
Parliament speaker Ali Larijani, Iran's former chief nuclear negotiator, on Wednesday accused US President Barack Obama of state terrorism over the killing.
But Foreign Minister Manouchehr Mottaki has stopped short of explicitly accusing Washington of being behind the bombing.
"The action taken ... by the enemies of logic, justice, humanity and the Iranian people is being investigated by relevant authorities," Mottaki said when asked about accusations of US and Israeli involvement.