Islamic State jihadists said via their propaganda mouthpiece Amaq that "Islamic State fighters attacked a gathering of Iranian forces" in Ahvaz, but the claim could not be verified and many recent IS claims have proved false.
The state-run IRNA news agency reported that the wounded included a woman and a child but did not elaborate.
"This crime is the extension of the plots by the U.S. allies in the region, seeking to create insecurity in Iran", Iran's Supreme Leader Ayatollah Ali Khamenei said in a statement, Xinhua news agency reported. "However, to their dismay, the Iranian nation will persist on the noble and prideful path they have taken and will - like before - overcome all animosities".
"Iran holds regional terror sponsors and their USA masters accountable for such attacks", he wrote.
Russian President Vladimir Putin on Saturday denounced the attack, offering condolences to Iranian President Hassan Rouhani and calling for stronger anti-terrorism cooperation.
Speaking at a military rally in Tehran, he said Trump will fail in the "economic and psychological war" he's launched against Iran, just as Hussein failed in his eight-year war against the Islamic Republic.
State media reports say around 20 people, including a child and women, were also injured in what the Iranian media termed a terrorist attack.
"It was reiterated to the ambassadors of the Netherlands and Denmark that the Islamic Republic of Iran had earlier warned about the residence of these individuals in these countries and has called for their arrest and prosecution", said Qassemi in a statement, adding that the ambassadors of the two countries declared that their governments were ready to share any information with regards to the terrorists and their records.
There has been no claim of responsibility for the attack in the city of Ahvaz.
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The bloodshed struck a blow to security in OPEC oil producer Iran, which has been relatively stable compared with neighboring Arab countries that have grappled with upheaval since the 2011 uprisings across the Middle East.
"We stand with the Iranian people against the scourge of radical Islamic terrorism and express our sympathy to them at this bad time", State Department spokeswoman Heather Nauert said. Rouhani said the USA withdraw from the nuclear deal was an attempt to get Iran to give up its military arsenal.
An anti-government Arab group, the Ahvaz National Resistance, was reported to have claimed responsibility for the attack.
"Hopefully we will overcome these sanctions with the least possible costs and make America regret its aggressiveness towards other countries, and particularly Iran", said Rouhani.
People of Ahvaz who are majority Sunni Arabs have very strong tribal ties to their cousins on the other side of the water divide which is Shat Al Arab, and are severely persecuted and discriminated by Tehran.
"Iran will neither abandon its defensive weapons nor will reduce its defense capabilities", Rouhani said.
On 7 June, 2017 in Tehran, 17 people were killed and dozens wounded in simultaneous attacks on the Parliament and on the tomb of revolutionary leader Ayatollah Ruhollah Khomeini - the first inside Iran claimed by Islamic State.
It said at least 53 people were wounded in the attack. The assault shocked Tehran, which has seen few militant attacks in the decades after the tumult surrounding the Islamic Revolution.