Political cartoons have a long tradition in Iran, despite many restrictions in the staunchly conservative Islamic republic on taboo subjects such as the supreme leader, the clergy and military.
The competition called on cartoonists to submit drawings that reveal the "true nature" of IS as "no human being can turn a blind eye to the crimes" of the Sunni extremists.
Launched last week, the International Daesh Cartoon and Caricature Contest attracted 300 entries from more than 40 countries -- including Australia, Brazil, Indonesia, Italy, Malaysia and Morocco.
"We want to show the true heinous nature of Daesh," said Masoud Shojai-Tabatabai, the chairman of the organising committee, using the Arabic acronym for IS.
"IS bears the name of Islam but has no relationship with this religion, aiming to create (a) divide between Muslims, between Sunnis and Shiites," he told AFP on the sidelines of the awards ceremony on Sunday night.
"We also want to denounce its supporters, the Westerners, the Zionists (Israel), and the United States."
Hardliners in Iran, the Syrian regime's most powerful regional ally, accuse the West, Turkey, Israel and some Arab countries of creating IS to sow Muslim discord and divert attention from the dire situation in the Palestinian territories.
Among those most lampooned in the cartoons are leaders from the United States, Arab nations, and Israel.
One cartoon depicts Hillary Clinton, the former US secretary of state who is running for president, in a knitted sweater bearing the letters ISIS -- another name for IS -- made of skulls.
A winning entry is of British Prime Minister David Cameron sporting a fox tail.
One illustrator also used the competition to denounce the media and their alleged bias against IS atrocities in a drawing of a jihadist holding the pixelated head of a decapitated victim.
The first prize went to a caricature of King Salman of Saudi Arabia, represented with the body of a rattlesnake.
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"The Arabs and Muslims must know the cruelty of IS, which kills women and children," said its creator, Sharham Shirzadi, a director of animated films at state television.
"I show King Salman, who has many supporters among Westerners, as he actually is -- a venomous snake who smiles but can kill."
Second place went to a portrait of Abu Bakr al-Baghdadi, the self-proclaimed "caliph" of vast tracts of land the jihadists have conquered in Iraq and Syria.
His beard is a thatch of blades dripping with blood, which is also splattered on the wall in the background that also features stars of David.
"We artists must do all we can to inform," said Behzad Bigdeli, an Iranian participant.
"The cartoons have more of an impact than text. Photos can do much to describe the horror, but cartoons have a comical side that stays in people's minds."
A Burmese cartoonist only known as Joker offered an image of a jihadist beheaded by the red line of an illustrator's pen as he is about to kill someone.
Asked about the political nature of the competition, Bigdeli said that "each country organises its competitions based on its political opinions".
"It's natural. But the main message is to show the true crimes of Daesh."
Bennaji Naji, a famous Moroccan cartoonist invited to take part, said: "Daesh is a danger to the world, as we saw with the attack on (French satirical weekly) Charlie Hebdo.
"We need to stick together," he said. "I wanted to tell people, 'Beware. Don't give money to terrorists. Give it to Palestine'."
One of his drawings is of an Arab prince extending his pipeline-like arms -- one filling a jihadist's bag with bank notes, and the other pouring nothing into another bag held by three Palestinian children.
Tabatabai is also the organiser of a competition of cartoons on the Holocaust, launched in late January in response to the publication by Charlie Hebdo of cartoons of the Prophet Mohammed.
That competition, which was criticised by some in the international community who expressed fears of anti-Semitism, has been suspended until further notice because of "budget" problems, he said.