President Hassan Rouhani has denounced the presence of foreign forces in the Gulf and said Iran will put forward a peace plan, after the US ordered reinforcements to the region.
"Foreign forces can cause problems and insecurity for our people and for our region," Mr Rouhani said in a speech at an annual military parade.
Mr Rouhani also said Iran would present a peace plan to the United Nations in the coming days.
"In this sensitive and important historical moment, we announce to our neighbours that we extend the hand of friendship and brotherhood to them," he said.
Tensions between Iran and the US and its allies have threatened to boil over since May last year when President Donald Trump unilaterally withdrew from a 2015 nuclear deal and later began reimposing sanctions in a campaign of "maximum pressure".
The tensions escalated in the wake of devastating 14 September attacks on Saudi oil installations that Washington and Riyadh have, to varying degrees, blamed on Tehran.
Following the attacks, which caused global oil prices to spike, Mr Trump initially raised the possibility of a military response, tweeting that the US was "locked and loaded".
Washington later expanded its long list of sanctions against Tehran by further targeting its central bank, as Mr Trump indicated he did not plan to strike back.
On Friday, Defence Secretary Mark Esper said the US was sending reinforcements to Saudi Arabia at "the kingdom's request", while noting the forces would be "defensive in nature" and focused on air and missile defence.
In his speech delivered before a massive military parade, Mr Rouhani called on the foreign powers in the Gulf region to "stay away".
"If they're sincere, then they should not make our region the site of an arms race," he said.
"Your presence has always brought pain and misery... The farther you keep yourselves from our region and our nations, the more security there will be.
"We are even ready to ignore their past mistakes... since today the situation is such that the enemies of Islam and the region, meaning America and Zionism, want to abuse the rift between us," said Mr Rouhani.
"Our logic is the logic of a Persian Gulf whose security comes from within."
Following his speech, the armed forces paraded their latest equipment, including tanks, missiles and armoured vehicles as Mr Rouhani and top military commanders saluted them.
The annual military parade marks the start of the week commemorating Iran's 1980-1988 war with Iraq known as the "sacred defence".
Mr Rouhani is expected to travel to New York tomorrow, a day before general debate kicks off at the UN General Assembly.
Foreign Minister Mohammad Javad Zarif, who is subject to US sanctions, has already arrived in New York.
Tensions have flared in the Gulf since May, when Iran began reducing its commitments to the nuclear deal and the US said it was sending forces to waters near the Islamic republic in response to "indications of a credible threat" from its forces.
The US deployed an aircraft carrier strike group and a bomber taskforce to the sensitive waterways, before sending B-52 bombers, an amphibious assault ship and Patriot missile battery.
Following the deployments, commercial ships were mysteriously attacked, drones downed and oil tankers seized in Gulf waters.
Mr Trump in June authorised a military strike after Iran shot down a US drone, only to call off the retaliation at the last moment.
The regional crisis deepened with the 14 September attacks on Saudi energy giant Aramco's Abqaiq processing plant and Khurais oilfield, which halved the kingdom's oil output.
Yemen's Iran-backed Huthi rebels claimed responsibility, but the US says it has concluded the attacks involved cruise missiles from Iran and amounted to "an act of war".
Saudi Arabia, which has been bogged down in a five-year war in Yemen, has warned of "appropriate measures" once the source of the strikes is confirmed by a UN investigation.
A Huthi plan for a cessation of hostilities announced on Friday has been welcomed by the UN, but Saudi Arabia was sceptical, saying it would "judge other parties by their deeds".