Bush said the actions of the Iranian leadership are threatening security around the world.
"Iran is today the world's leading state sponsor of terror," he said. "It sends hundreds of millions of dollars to extremists around the world, while its own people face repression and economic hardship at home."
Bush said the Islamic Republic was subverting hopes for peace around the region by sending arms to the Taliban in Afghanistan, Shi’ite militants in Iraq, and militants in Lebanon. He also said Tehran had defied the United Nations and destabilized the region by failing to be transparent about its nuclear program.
The U.S. president said Washington was rallying friends to confront the threat paused by Iran "before it's too late."
"Iran's actions threaten the security of nations everywhere," Bush said. "So the United States is strengthening our long standing security commitments with our friends in the [Persian] Gulf and rallying friends around the world to confront this danger before it is too late."
Bush said the people of Iran -- whom he called "rich in culture and talent" -- had the right to live under a government that listened to their wishes.
"We know from experience that democracy is the only system of government that yields lasting peace and stability." -- U.S. President George W. Bush
"The day will come when the people of Iran have a government that embraces liberty and justice and Iran joins the community of free nations," he said. "And when that day comes, they'll have no better friend than the United States of America."
Bush was giving a speech in Abu Dhabi on the latest leg of his Middle East tour.
Speaking at the Emirates Centre for Strategic Studies and Research, he said the United States' commitment to fostering democracy in the Middle East was "real, strong, and lasting."
"The United States joins you in your commitment to the freedom and security of this region. And we will not abandon you to terrorists or extremists," he said.
Bush compared that commitment to the United States' long involvement in helping democracy take root in many Asian countries, such as postwar Japan.
He welcomed democratic reforms being undertaken in several gulf states, and urged other Middle Eastern nations to take up democracy.
"We know that democracy is the only form of government that treats individuals with the dignity and equality that is their right," Bush said. "We know from experience that democracy is the only system of government that yields lasting peace and stability."
In his speech, Bush also addressed the Middle East peace process, trying to encourage support from his Gulf Arab allies.
Bush is on a weeklong Middle East tour that has so far taken him to Israel, the Palestinian territories, Kuwait, Bahrain, and the United Arab Emirates. He is scheduled to travel to Saudi Arabia and Egypt before returning to the United States on January 16.