Iran has increased the range of its missiles to 1,250 miles, a senior official was quoted as saying on Tuesday, putting parts of Europe within reach for the first time.
Military experts had earlier put Iran's missile range at 810 miles, which would allow it to strike anywhere in Israel.
"Now we have the power to launch a missile with a 2,000 km (1,250 mile) range," the news agency IRNA quoted influential former President Akbar Hashemi Rafsanjani as saying. "Iran is determined to improve its military capabilities."
"If the Americans attack Iran, the world will change ... they will not dare to make such a mistake," Rafsanjani was quoted as saying in a speech at an exhibition on Space and Stable National Security.
Washington has accused Tehran of secretly developing nuclear weapons.
Iran insists its nuclear program is aimed only at generating electricity. It says its missiles are for defensive purposes and would be used to counter a possible Israeli or U.S. strike against its nuclear facilities.
"The United States has had, and continues to have, serious concerns about Iran's missile programs," US State Department spokesman Adam Ereli told reporters.
"We view Iran's efforts to further develop its missile capabilities as a threat to the region and to the United States interests, and all the more so in light of its ongoing nuclear program."
Ereli declined to say whether Washington believed the Iranian official's 1,250 mile range claim, saying he could not discuss intelligence matters.
In recent months, Iranian officials have frequently trumpeted their ability to strike back at any aggressor, and in August they announced they had successfully tested an upgraded version of the medium-range Shahab-3 missile.
Military experts say the unmodified Shahab-3 had a range of 810 miles. Shahab means meteor in Persian.
While Iran has had Israel in its missile sights for some time, Israeli officials said the longer 1,250 mile range was more significant for Europe than for Israel.
"We are well prepared to defend the state of Israel ... The Iranians will have to think twice before using these kinds of weapons," a senior Israeli government said.
Defense Minister Ali Shamkhani said last month that a new "strategic missile" had recently been delivered to the armed forces, but did not give its range.
Israel has long accused Iran of working on a long-range missile, the Shahab-4, which would be able to reach Europe. Iran denies any plans to build a Shahab-4 missile.
Tehran recently announced plans to launch its own satellite into space next year. Military experts say a satellite launch rocket could easily be adapted for military purposes.
"We are very happy that our defense ministry ... will take us to the stage that we are able to use independent satellite technology in the fields of building, launching, positioning and receiving," Rafsanjani said.