The Defence Ministry announced the launch as world powers sought to agree a date and venue with Iran for resuming talks to resolve a standoff with the West over Tehran's contested nuclear programme.
The Islamic Republic denies seeking weapons capability and says it seeks only electricity from its uranium enrichment so it can export more of its considerable oil wealth.
The powers have proposed new talks in February, a spokesman for the European Union's foreign policy chief said yesterday.
The Iranian defence ministry said the space launch of the monkey coincided "with the days of" the Prophet Mohammad's birthday, which was last week, but gave no date.
The launch was "another giant step" in space technology and biological research "which is the monopoly of a few countries", the statement said.
The small grey monkey was pictured strapped into a padded seat and being loaded into the Kavoshgar rocket dubbed "Pishgam" (Pioneer) which state media said reached a height of more than 120km.
"This shipment returned safely to Earth with the anticipated speed along with the live organism," Defence Minister Ahmad Vahidi, told the semi-official Iranian Fars news agency.