In the capital, hundreds of thousands converged on the historic Azadi (Freedom) Square, where President Hassan Rouhani was set to make a speech.
Many demonstrators carried the traditional placards reading "Death to America" and "Death to Israel" while others carried the Iranian flag.
Iran holds annual celebrations commemorating its 1979 revolution, but Thursday was the first since a landmark deal with world powers -- including the United States -- was finalised, paving the way for punishing economic sanctions on Tehran to be lifted.
The deal has seen a host of foreign investors declare interest in Iran, an unblocking of frozen Iranian assets held abroad and a warming of ties between the Islamic republic and the West.
Young people at a rally on Thursday reconstructed a scene from mid-January that saw US Navy sailors detained by Iranian Revolutionary Guards.
State television has repeatedly broadcast pictures of the 10 sailors with their hands on their heads. On Wednesday night, a brief video also showed one soldier in tears.
Signup to our newsletter and follow us on Facebook and Twitter!
Touted domestically as proof of Iran's ability to defend its borders, the sailors were released within 24 hours, just days before the nuclear deal was finalised on January 16.
Revolutionary Guards were present on Thursday, displaying a long-range Imad ballistic missile in central Tehran. Many people were taking selfies with the missile, the ISNA news agency reported.
Last October, Iran "successfully" tested the new missile, which Tehran says has a range of 1700 kilometres (1050 miles).
Local media also published images of General Qassem Suleimani, chief of the Guards' Quds special forces, marching in the rally.
Louis Farakkhan, leader of the American group Nation of Islam, was also to make a speech as honarary guest after Rouhani.
Iran's Supreme Leader Ayatollah Ali Khamenei and other leaders had called in recent days for mass participation in rallies in a bid to demonstrate national unity.