US authorities said they had broken up a plot by two men linked to Iran's security agencies to assassinate Saudi Ambassador Adel al-Jubeir. One was arrested last month while the other was believed to be in Iran.
Iran denied the charges and expressed outrage at the accusations.
But President Barack Obama called the plot a "flagrant violation of US and international law" and Saudi Arabia said it was "despicable."
The United States said Tehran must be held to account and Secretary of State Hillary Clinton, in a Reuters interview, expressed hope that countries that have hesitated to enforce existing sanctions on Iran would now "go the extra mile."
The US State Department late on Tuesday issued a three-month worldwide travel alert for American citizens, warning of the potential for anti-US action, including within the United States.
"The US government assesses that this Iranian-backed plan to assassinate the Saudi ambassador may indicate a more aggressive focus by the Iranian government on terrorist activity against diplomats from certain countries, to include possible attacks in the United States," it said in a statement.
At a news conference, FBI Director Robert Mueller said the convoluted plot, involving monitored international calls, Mexican drug money and an attempt to blow up the ambassador in a Washington restaurant, could have been straight from a Hollywood movie.
US Attorney General Eric Holder alleged that the plot was the work of the Islamic Revolutionary Guard Corps (IRGC), the guardian of Iran's 32-year-old revolution, and the Quds force, its covert, operational arm.
"High-up officials in those (Iranian) agencies, which is an integral part of the Iranian government, were responsible for this plot," Holder told the news conference.
"I think one has to be concerned about the chilling nature of what the Iranian government attempted to do here," he said.
The primary evidence linking the Iranian government to the planned attempt on al-Jubeir's life are the words of one of the alleged plotters, who told US law enforcement agents after his arrest that he had been recruited and directed by men he understood were senior Quds Force officials.
The Quds Force has not previously been known to focus on targets in the United States.
A plot against targets inside the United States "would be a first for the Quds Force," said Kenneth Pollack, a former CIA and National Security Council analyst who now heads the Saban Center at the Brookings Institution in Washington.
"I do want to hear more about what evidence (US authorities) have and why they believe" that the Quds Force was involved, Pollack said. But he added that "there is always a first time."
Senate Intelligence Committee Chairwoman Dianne Feinstein, who said she was briefed on intelligence about the plot, said "it looks like it's the Quds Force, the IRGC."
"We do not know that it went up above the IRGC" to higher levels of the Iranian government, Feinstein told reporters. "I just don't see how this could be done any other way, that even the Quds force would go out and do something on their own to assassinate somebody who represented a country, not even in that country but in a third country."
There are no formal diplomatic ties between the Islamic republic and Washington, which accuses Tehran of backing terrorism and pursuing nuclear arms, a charge Iran has denied.
Iran already faces a raft of tough economic and political sanctions and Washington imposed further economic sanctions on five Iranians including four senior members of Quds.
Iran and Saudi Arabia have likewise long been at odds. The Saudis, who see themselves as the centre of the Sunni sect of Islam, have been alarmed by what they see as expansionist tendencies by majority Shi'ite Iran, whose people are primarily Persian rather than Arab.
US officials said there had also been initial discussions about other alleged plots, including attacking the Saudi and Israeli embassies in Washington, however no charges for that were revealed on Tuesday.
Rejecting the allegations in a letter to UN Secretary-General Ban Ki-Moon, Iran's ambassador to the United Nations voiced outrage and complained of "warmongering" by the United States.
"I am writing to you to express our outrage regarding the allegations leveled by the United States officials against the Islamic Republic of Iran on the involvement of my country in an assassination plot targeting a foreign diplomat in Washington," Iranian UN Ambassador Mohammad Khazaee said in the letter.
"The US allegation is, obviously, a politically motivated move and a showcase of its long-standing animosity towards the Iranian nation," he said, reiterating that Tehran "categorically and in the strongest terms condemns this shameful allegation."
Last month hopes were raised of improved ties when Iran released two US hikers accused of spying when they were arrested on the Iran-Iraq border in 2009. Holder said there was no link between the hikers' case and the alleged plot.
US officials identified the two alleged plotters as Gholam Shakuri, who is a member of the Quds force, and Manssor Arbabsiar, who was arrested on Sept. 29 when he arrived at John F. Kennedy International Airport from Mexico.
Arbabsiar, 56, who is a naturalized US citizen and holds an Iranian passport, initially cooperated with authorities after being arrested.
He made calls to Shakuri after being arrested and acted as if the plot was still a go, court documents said.
Arbabsiar made a brief appearance in a Manhattan courtroom on Tuesday where he was ordered detained and assigned a public defender. He appeared in blue jeans and a dress shirt, with thinning gray hair and a scar on the left side of his face.
Officials said that the Saudi ambassador, al-Jubeir, who is close to King Abdullah bin Abdul-Aziz and has been in his post since 2007, was never in danger. President Obama was briefed in June about the alleged plot.
According to the court documents, the assassination plot began to unfold in May 2011 when Arbabsiar approached an individual in Mexico who was posing as an associate of an unidentified drug cartel to help. That individual turned out to be an informant for the US Drug Enforcement Administration.
The confidential source, who was a paid informant but not identified, immediately tipped law enforcement agents, according to the criminal complaint. Arbabsiar paid $100,000 to the informant in July and August for the plot, a down payment on the $1.5 million requested.
Shakuri approved the plan to kill the ambassador during telephone conversations with Arbabsiar, the complaint said.
As part of the plot, the informant talked to Arbabsiar about trying to kill the ambassador at a Washington, D.C. restaurant he frequented, but warned him that could lead to dozens of others being killed, including US lawmakers.
The criminal complaint said that Arbabsiar responded "no problem" and "no big deal."
After Arbabsiar was arrested in New York, he confessed and provided US authorities with more details about the Iranian government's alleged involvement, Holder said.
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