Supreme Leader Ayatollah Ali Khamenei says Iran will destroy the Israeli cities of Tel Aviv and Haifa if it comes under attack by the Jewish state.
Khamenei, who has the final say on all key decisions in Iran, issued the warning in a televised speech from the northeastern city of Mashhad.
Israel has threatened to take military action against Iran if diplomacy fails to stop the country's nuclear activities, which the West suspects are intended to develop nuclear weapons.
Tehran denies the allegation.
Khamenei also said he was not optimistic but also "not opposed" to direct talks with the United States.
Regarding sanctions placed on Iran by the EU, the United States, and other countries over its nuclear program, Khamenei said they had had an effect.
"The Americans are happy the sanctions have affected us. Yes, the sanctions have had an effect on us. This is also a problem for us," the Iranian leader said.
"Our economy is dependent on oil. We need to separate our economy from oil and our governments need to incorporate this into their plans. When a country's economy is reliant and dependent on one specific thing, enemies will also focus on that thing."
Washington has offered direct talks with Iranian officials on the sidelines of diplomatic efforts by the United States, Russia, China, Britain, France, and Germany aimed at finding a solution to the nuclear standoff.
"My take is that the Americans are not interested in seeing an end to the nuclear issue, they don't want the nuclear issue to be resolved. If they did, solutions are just around the corner," Khamenei said.
"The only thing that Iran wants is to preserve its right to [uranium] enrichment and we want the world to recognize this right for us."
Based on reporting by AFP, Reuters, and AP