The US ratcheted up pressure on Iran, putting sanctions on 13 individuals and 12 entities days after the White House put Tehran "on notice" over a ballistic missile test.
The move against Iran is the first by the US government since President Donald Trump took office.
An image provided by Iran's Islamic Revolutionary Guard of a missile launcher (file photo). Photo: AFP / Sepah News
Under the sanctions, those involved cannot access the US financial system or deal with US companies. They are also subject to "secondary sanctions," which means foreign companies and individuals are prohibited from dealing with them, or risk being blacklisted by the US.
President Donald Trump tweeted earlier: "Iran is playing with fire - they don't appreciate how 'kind' President Obama was to them. Not me!"
But Iran has said it will not yield to "useless" American threats from "an inexperienced person".
White House spokesman Sean Spicer said the sanctions were "in the pipeline" before Mr Trump took office but were activated in light of recent events,.
"These kinds of sanctions don't happen quickly but I think the timing of them was clearly in reaction to what we've seen over the last couple days," he said.
The measures are similar to actions taken by the Obama administration targeting Iran's ballistic missile network, but senior Trump administration officials said the action was just the opening shot in plans to go after Tehran.
A senior US administration said Friday's sanctions were an "initial step" in response to Iran's "provocative behavior," suggesting more could follow if Tehran does not curb its ballistic missile programme and continues support for Houthi militia in Yemen.
Some of the newly sanctioned groups are based in the United Arab Emirates, Lebanon and China, and include members of the Islamic Republic's Revolutionary Guards Corps.
This week, the US national security adviser, Michael Flynn, said the administration was putting Iran "on notice" for its medium-range missile test.
But Iran's Foreign Minister Mohammad Javad Zarif tweeted on Friday that the Islamic Republic was unmoved by US threats.
"Will never initiate war, but we can only rely on our own means of defence," Mr Zarif wrote.
The sanctions came as the US moved a Navy destroyer closer to the coast of Yemen to guard waterways from the Iran-aligned Houthi militia, Reuters news agency reports.