The new ballistic missile has a range of 2,000 km. It is named after a city in southwestern Iran that was occupied by Iraqi forces in the beginning of the eight-year war that left 1 million people dead.
Iran said Saturday it would keep developing its arsenal, despite USA pressure to stop.
Washington has imposed unilateral sanctions against Iran, saying Tehran's ballistic-missile tests violated a United Nations resolution that endorsed the nuclear deal and called on Tehran not to undertake activities related to ballistic missiles capable of delivering nuclear weapons.
On Thursday, Iran's Supreme Leader Ayatollah Ali Khamenei, who has final say on all major policies in Iran, said Trump's "cheap, ugly, foolish and unreal" remarks before the UN General Assembly were a sign of desperation.
What's new, he said, is that Iran says its ballistic missiles can carry multiple warheads and maybe several cluster bombs.
The launch of the so-called Khorramshahr missile was shown on Iranian state television, though the video feed did not indicate a time or location of the test.
In a speech hours earlier, Iranian President Hassan Rouhani vowed that his country will keep strengthening its military capabilities without asking permission from any country.
Britain voiced concerns about the latest test.
"Extremely concerned by reports of Iran missile test, which is inconsistent with United Nations resolution 2231". Call on Iran to halt provocative acts'.
Under that agreement between Iran and five major world powers, Tehran agreed to uranium-enrichment limits and to worldwide inspections of its nuclear facilities in return for the lifting of crippling banking and trade sanctions.
During the production of the Khoramshahr missile, no foreign components were used, Iranian news agency Tasnim specified.
Iran's Defence Minister, Gen Amir Hatami, outlined the missile's "unique specifications".
Iran said yesterday that it had successfully tested a new medium-range missile in defiance of warnings from Washington that it was ready to ditch a landmark nuclear deal over the issue.
A ballistic missile, called Khorramshahr, was put on display during the parade.
He continued, "We can not let a murderous regime continue these terrorists destabilizing while building unsafe missiles and we Hezbollah provide by an can not if it provides cover for the eventual agreement of a nuclear program".