Tajik President Emomali Rahmon and Iranian Energy Minister Majid Namju have attended a ceremony opening construction of the Sangtuda-2 hydropower plant.
According to the Tajik president's website, president.tj, Rahmon and Namju pressed buttons that detonated explosives, blocking the Vakhsh River, a tributary of the Amu-Darya River.
Construction of the hydropower plant has been controversial, as Tajikistan's downstream neighbor Uzbekistan has complained such projects threaten its water supply.
The issue has heightened tensions between the two countries.
Tajikistan accuses Uzbekistan of stopping railway cars with construction materials for Sangtuda-2 and other hydropower projects.
Iran is helping fund construction of Sangtuda-2.