After decades of hostility with the US, Tehran said it was determined to expand its military power and ballistic missile program despite mounting pressure to curb its defensive work.
Traffic was diverted from roads leading up to Azadi (freedom) square ahead of a march to remember the day in 1979 when Ayatollah Ruhollah Khomeini ousted the shah's last government.
State television offered blanket coverage of the commemorations, showing marchers in cities ranging from Abadan in south-western Iran to Mashad in the northeast, all joined in fervent denunciations of both the US and Israel.
Iran displayed its ballistic missile capabilities during a parade, including the Zolfaqar, a ground-to-ground missile with a 700 km (435 miles) range and the Qiam, with a range of 800 km, according to Tasnim news agency.
In a speech at Tehran's Azadi (Freedom) square, Rouhani said US efforts to separate Iran from other countries would fail.
Following reports of a second failed space launch by Iran in less than a month, the U.S. State Department last week called for "tougher worldwide restrictions to deter Iran's missile program".
"40 years of corruption".
State TV showed large crowds defying frigid weather and carrying Iranian flags while chanting "Death to Israel, Death to America", trademark chants of the revolution. 40 years of terror.
Journalist Mikey Kay recalled in this vein that Bolton has spoken at least eight times at rallies organised by MEK (Mojahedin-e Khalq), an Iranian dissident group which calls for regime change in Iran and is known to pay up to $50,000 per speech.
'The long-suffering Iranian people deserve a much brighter future, ' he added.
But despite the official festivities today's Islamic republic faces acute economic challenges as it struggles with a mix of domestic hardships and U.S. sanctions.
The event Monday is the culmination of official celebrations called the "10 Day Dawn" that mark the period between February 1, 1979 and February 11 when the revolution's leader Khomeini returned from exile and toppled the monarchy.
Reuters could not independently verify the pictures.
Last year, Iran cracked down on protests over poor living standards in over 80 cities and towns that posed the most serious challenge to its clerical leadership since a 2009 revolt over disputed elections.
U.S. President Donald Trump pulled out of Iran's 2015 nuclear deal with world powers past year and reimposed sanctions on Tehran, dealing a blow to the country's economy.
Waving Iranian flags, chanting "Death to America" and burning USA and Israeli flags, hundreds of thousands of people poured out onto the streets across Iran on Monday, marking the date that's considered victory day in the country's 1979 Islamic Revolution.
Iranian political and military officials have also attended the rallies along with other people to rejoice at the auspicious ceremony.
Rouhani also promised the crowds that Iran would overcome the economic hardship amid the country's spiraling economy and the newly imposed USA sanctions.