Iran's president says his nation has successfully produced the enriched uranium needed to make nuclear fuel.
The UN has given Iran 30 days to halt its nuclear research
Mahmoud Ahmadinejad said Iran had joined the nations with "nuclear technology" but again insisted it did not want nuclear weapons.
Tehran resumed enrichment research in February. Last month the UN gave Iran 30 days to halt work or face action.
Iran's announcement comes on the eve of a visit by the head of the UN's nuclear watchdog, Mohamed ElBaradei.
Western powers fear Iran is developing a nuclear bomb. Iran says its nuclear programme is for civilian use.
The US responded to the latest news by saying that Iran was "moving in the wrong direction".
'Pathway of defiance'
In a televised speech in the north-western holy city of Mashhad, Mr Ahmadinejad said: "I am officially announcing that Iran has joined the group of those countries which have nuclear technology."
His audience broke into cheers and chants of "Allahu akbar" (God is great).
Mr Ahmadinejad called on the nation's scientists to press ahead with "industrial-scale enrichment" and urged the West to respect what he called Iran's right to peaceful atomic technology.
He said the "nuclear fuel cycle had been completed" with the enrichment on Sunday at the Natanz plant.
NUCLEAR FUEL CYCLE
Mined uranium ore is purified and reconstituted into solid form known as yellowcake
Yellowcake is converted into a gas by heating it to about 64C (147F)
Gas is fed through centrifuges, where its isotopes separate and process is repeated until uranium is enriched
Low-level enriched uranium is used for nuclear fuel
Highly enriched uranium can be used in nuclear weapons
Vice-president and atomic energy chief Gholam Reza Aghazadeh confirmed Iran had also produced 110 tons of uranium gas needed to feed the enrichment process - twice the amount it said last year that it had produced.
The US condemned Iran's announcements.
State department spokesman Sean McCormack said: "We would have hoped that the Iranian regime would have taken this opportunity to choose a pathway of diplomacy as opposed to the pathway of defiance."
Mr ElBaradei, the head of the International Atomic Energy Agency, is expected to arrive in Iran on Wednesday to discuss its nuclear programme.
He has to report back to the Security Council at the end of this month.
Should Iran have failed to halt its enrichment by then, the council will have to consider its next move, with the US among those likely to call for sanctions.
But those calls may face opposition from Russia and China.
Earlier on Tuesday, ex-Iranian President Akbar Hashemi Rafsanjani had told Kuwait's Kuna news agency Tehran had operated 164 centrifuges for the first time, achieving "industrial output".
The 164 centrifuges are needed to provide the cascade that creates enriched uranium.
But the process would only create the low-level enrichment needed for nuclear fuel.
Iran would need thousands of centrifuges to create the highly enriched uranium needed for nuclear weapons.
Experts say Iran is years away from having a nuclear bomb.
BBC world affairs correspondent Paul Reynolds says Iran's announcement is significant for two reasons.
Firstly it indicates Iran has taken a major step forward technically, and secondly it is in direct defiance of the UN Security Council's call and is likely therefore to lead to even greater confrontation with the West.