Moscow is already at odds with the West over its nuclear ties with Tehran. The regime is to buy 29 TOR-M1 systems designed to bring down aircraft and guided missiles at low altitudes.
This is the biggest sale of Russian defense hardware to Iran for about five years. Moscow and Tehran had already signed the contract.
Interfax news agency separately quoted a source as saying the deal, which would also include modernizing Iran’s air force and supplying some patrol boats, was worth more than $1 billion.
The move could strain Moscow’s efforts to broker a deal between Iranian regime and European negotiators aimed at breaking a deadlock over Tehran’s nuclear program.
Israel in particular is nervous about Iran’s military potential after mullahs’ President Ahmadinejad said in October that Israel should be "wiped off the map" – comments condemned by Russia at the time.
Western countries suspect Iran of seeking nuclear weapons under the cover of a civilian atomic program.
One Western diplomat who closely watches Russia-Iran dealings told Reuters that the news of the deal was alarming and would further increase tensions.