A “terrorist attack” has killed at least three people and wounded several others in the south-eastern port city of Chabahar, Iranian state television says.
It reported there were sounds of explosions and shooting in the city on Thursday.
Details were sketchy as the situation was still developing.
Chabahar, near Iran’s border with Pakistan on the Sea of Oman, is home to a new port recently built and is an economic free zone for the country.
State authorities did not identify who was behind the attack.
No militant group immediately claimed responsibility.
State television broke into its regular broadcast to report the attack, as such assaults are rare in the Islamic Republic.
Rahmdel Bameri, a provincial official, said a suicide attacker driving a vehicle loaded with explosives drove up to the police headquarters.
He said police officers blocked the vehicle and started firing at the driver, who then detonated his explosives.
State TV also showed footage of smoke rising over the city.
The attack comes as Iran’s economy reels in the wake of the US re-imposing sanctions lifted by Tehran’s nuclear deal with world powers.
While Iran still complies with the accord, President Donald Trump withdrew the US over the deal in part due to Tehran’s ballistic missile programme, its “malign behaviour” in the Middle East and its support of militant groups like Hezbollah.
While rare, Iran has been targeted in recent years by militant attacks.
In September, gunmen disguised as soldiers opened fire on a military parade in Ahvaz, killing and wounding dozens.
Arab separatists and the Islamic State group both claimed responsibility for the attack.
On June 7, 2017 another co-ordinated Islamic State group attack on parliament and the shrine of Ayatollah Ruhollah Khomeini, the leader of Iran’s 1979 Islamic Revolution, killed at least 18 people and wounded more than 50.