Iran claims to have successfully test-fired new missiles including a longer range Shahab-3 that can reach Israel, according to reports.
Officials said the tests were in response to US and Israeli threats.
Nine long and medium-range missiles were tested during the war games in the Persian Gulf and the strategic Strait of Hormuz, through which 40% of the world's oil passes.
General Hossein Salami of Iran's Revolutionary Guards Corps (IRGC) said the exercise, dubbed The Great Prophet 3, would "demonstrate our resolve and might against enemies who in recent weeks have threatened Iran with harsh language".
Last month the New York Times reported that Israel had mounted a major long-range military air exercise – involving more than 100 F15 and F16 fighters – as a rehearsal for a potential strike on Iran's nuclear facilities.
The Shahab 3 missile is equipped with a one-ton conventional warhead and has a reported range of 1,250 miles.
Operation 'Great Prophet 3' was a joint maneuver carried out by the IRGC naval and ground forces.
IRGC naval commander Morteza Saffari said: "The IRGC Navy is carrying out this maneuver to show it is fully prepared to counter any possible enemy aggression or adventurism."
"The maneuver also sends out a reassuring message to regional countries that together we can secure the Persian Gulf and the Strait of Hormuz without the presence of foreign force."
Iranian state television quoted Hossein Salami, the Revolutionary Guards air force commander, as saying: "The aim of these war games is to show we are ready to defend the integrity of the Iranian nation. Our missiles are ready for shooting at any place and any time, quickly and with accuracy."
"The enemy must not repeat its mistakes. The enemy targets are under surveillance," he added.
The US condemned the exercises and said Tehran should refrain from such tests.
White House spokesman Gordon Johndroe said Iran should "refrain from further missile tests if they truly seek to gain the trust of the world" .
The missile launch comes one day after an aide to supreme leader Ayatollah Ali Khamenei warned that Iran would "set fire" to Israel and the US navy in the Persian Gulf -- if it was attacked.