The BBC reports
that the Kavoshgar 3 (Explorer) rocket is reportedly carrying a capsule with live animals including a rat, turtles and worms.
Footage shown on state television shows the rocket being fired from a launch pad, and the capsule detaching from the rocket.
President Ahmadinejad praised the launch of the satellite and the progress his country was making in its space programme.
The launch occurred just days after he US military failed to shoot down a ballistic missile in a test resembling an Iranian or North Korean strike after a radar malfunctioned.
The test was carried out
on Sunday at a US Army site at the Kwajalein Atoll in the Marshall Islands but the target missile was not intercepted as planned.
Meanwhile Iran has poured scorn
on US intentions to enhance missile defence in the Gulf.
The US plans were yesterday dubbed a "puppet show" by the speaker of the Iranian parliament, raising tensions with both Washington and Tehran's Arab neighbours.
The Obama administration on Monday pledged to do more to protect its Middle East allies against Iran following reports the US was working with Gulf states to upgrade defence capabilities in the region.