Former Iranian President Akbar Hashemi Rafsanjani has been elected speaker of a powerful clerical body responsible for supervising Iran's Supreme Leader.
Rafsanjani is considered a rival to President Ahmadinejad
The Assembly of Experts has the power to dismiss the Islamic state's highest authority, Ayatollah Ali Khamenei.
Mr Rafsanjani will succeed Ayatollah Ali Meshkini, who died in July.
Correspondents say the appointment further consolidates the authority of Mr Rafsanjani, who is already a powerful figure in Iranian politics.
Considered a "pragmatic conservative", Mr Rafsanjani's victory will also be seen as a blow to Iran's hardline president, Mahmoud Ahmadinejad.
The BBC's Jon Leyne in Tehran says there is now a clear divide in Iranian politics between supporters of Mr Rafsanjani and those of Mr Ahmadinejad, and a complex power struggle is being carried out behind the scenes.
Before he went into the election, which was held behind closed doors, Mr Rafsanjani was keen to stress the importance of the supervisory body.
"The Assembly of Experts should be considered one of the main pillars of the country because it has the responsibility to supervise the leader's qualification," he said.
Afterwards, officials announced that Mr Rafsanjani had received 41 votes in the 86-seat assembly, 11 more than his nearest challenger, Ayatollah Ahmed Jannati.
Ayatollah Jannati, a hard-line conservative cleric who heads the powerful Guardian Council, had earlier expressed his unhappiness with Mr Rafsanjani's political resurgence.
Ayatollah Mohammed Taqi Mesbah-Yazdi, an anti-reformist cleric considered Mr Ahmedinejad's mentor, came third in the election.
Mr Rafsanjani has been a dominant figure in Iranian politics since the 1980s.
The assembly has never openly challenged the Supreme Leader
He served two terms as president from 1989 to 1997, after nine years as an influential speaker of parliament under Ayatollah Khomeini, the founder of the republic.
As president, Mr Rafsanjani sought to encourage a rapprochement with the West and Russia and to re-establish Iran as a regional power. He also advocated free-market economic reforms and opposed harsh Islamic penal codes.
He stood again for the presidency in June 2005, but despite receiving the highest number of votes in the election's first round, was beaten in a run-off vote by Mr Ahmadinejad.
He is also head of the Expediency Council, a body which arbitrates in disputes between parliament and the Guardian Council.