"The test of the Hoveizeh cruise missile was carried out successfully at a range of 1,200 kilometers and accurately hit the set target", Defence Minister Amir Hatami said, quoted on state television which broadcast footage of its launch.
The Hoveizeh, part of the Soumar family of cruise missiles unveiled in 2015, has a range of over 1,350 km (840 miles) and is created to be used against ground targets, Hatami said.
The European Union has welcomed a new mechanism to trade with Iran while bypassing US sanctions, but criticized Tehran over its "destabilizing" ballistic missile program, its "hostile activities" on the territories of several EU member states, and its meddling in countries in the Middle East.
Amirali Hajizadeh, head of the Revolutionary Guards' aerospace division, said at the event Iran had overcome initial problems in producing jet engines for cruise missiles and could now manufacture a full range of the weapons.
Iran's space programme has also been criticised by the West, with Washington charging that an abortive satellite launch in mid-January was cover for a bid to develop an intercontinental ballistic missile capability.
The launch followed Washington's warning to Iran about three rocket launches it had in the works, which the U.S. insisted would violate a UN Security Council resolution.
Tehran insists its missile development program is "purely defensive" and compliant with the resolution.
Since agreeing to a 2015 nuclear deal with world powers, Iran has expanded its missile program despite warnings from the United States.
The EU also expressed concern at the "growing tensions in the region and Iran's role in this context, including the provision of military, financial and political support to non-state actors in countries such as Syria and Lebanon".
The resolution, which enshrined Iran's nuclear deal, called upon Tehran to refrain for up to eight years from work on ballistic missiles created to deliver nuclear weapons.
Last week, France, Germany and Britain announced they were moving forward with a new channel for non-dollar trade with Iran to avert U.S. sanctions on the Iranian government.
In a long-awaited statement on Iran that has been the subject of more than a week of wrangling in Brussels, the European Union restated its commitment to saving the 2015 nuclear deal with Iran and took aim at Washington for abandoning the pact and reimposing sanctions.
"If Europe or anyone else tries to pursue the plot aimed at Iran's disarmament, we will be forced to make a strategic leap".
Following the United States exit, Iran and the remaining parties launched talks to save the accord.