On Feb. 11, 1979 Iran's army declared its neutrality, paving the way for the fall of US -backed Shah Mohammad Reza Pahlavi.
Iranians celebrated the 1979 overthrow of Shah Mohammad Reza Pahlavi, who was supported by the USA, "waving Iranian flags, chanting "Death to America" and burning US and Israeli flags", reported The Associated Press.
The large turnout in state-sponsored rallies came as Iranians face rising prices, food shortages and high inflation that have triggered waves of protests.
This year's anniversary comes as tensions rise with the United States and Iran grapples with the aftermath of President Donald Trump's pullout last May from the 2015 nuclear deal between Iran and world powers and tough US economic sanctions, re-imposed in November.
In the capital's Azadi Square, President Hassan Rouhani dismissed US efforts to isolate Tehran while touting his country's military might.
Banners held by marchers or hung along the streets bore slogans including "Death to America", "Death to Israel", "we will trample on America", "40 years of challenge, 40 years of USA defeats". Iran insists that it has the right to operate in Syria, since it has been invited by Assad to help rebuild the country.
Israeli Prime Minister Benjamin Netanyahu warned Iran that this year could be the last time it celebrates the anniversary if it attacks his country.
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However, analysts say Iran's push to back militants in the wider Mideast and Saudi Arabia's efforts to mobilize the Sunni world against the Shiite power would turn many away.
"The world saw when Iran made a decision to help people of Syria, Iraq, Lebanon, Palestine and Yemen, they achieved victory".
In January, President Hassan Rouhani said his country was experiencing its worst economic crisis since the overthrow of the Shah.
The rallies on the national holiday of "Bahman 22nd" began at 9 am local time in more than 1,000 cities and towns as well as 10,000 villages across Iran.
"We are constantly working according to our understanding and the need to prevent Iran and its proxies from entrenching on our northern border and in our region in general. They must leave the region", said Brig.
Cleric Hossein Firouzi told AFP Iran's revolution had achieved everything it set out to in terms of military power, political identity and scientific achievements.
"We have not asked and will not ask for permission to develop different types of. missiles and will continue our path and our military power", President Hassan Rouhani said in a speech at Tehran's Azadi (Freedom) square. Many people carried pictures of Khomeini, who died in 1989, and Iran's current Supreme Leader, Ayatollah Ali Khamenei.