US President Barack Obama has accused the Iranian government agents of trying to hire a Mexican drug cartel to assassinate the Saudi ambassador in the America.
The US immediately used the thwarted plot to ratchet up sanctions and recruit international allies to try to further isolate Tehran.
Two men, including a member of Iran's special foreign actions unit known as the Quds Force, were charged in New York federal court with conspiring to kill the Saudi diplomat, Adel Al-Jubeir.
Officials say the men tried to hire a member of a Mexican drug cartel to carry out the assassination with a bomb attack while Al-Jubeir dined at his favourite restaurant.
President Obama called the plot a "flagrant violation of U.S. and international law".
"The idea that they would attempt to go to a Mexican drug cartel to solicit murder-for-hire to kill the Saudi ambassador, nobody could make that up, right?" Secretary of State Hillary Rodham Clinton said.
She was blunt in saying the US would use the case as leverage with other countries that have been reluctant to apply harsh sanctions or penalties against Iran.
Clinton said she and President Obama called world leaders to tell them of the developments.
"This really, in the minds of many diplomats and government officials, crosses a line that Iran needs to be held to account for," Clinton said.
She said she and Obama wanted to "enlist more countries in working together against what is becoming a clearer and clearer threat" from Iran, which denied the charges and expressed outrage at the accusations.
The US criminal complaint said the Iranian plotters hired a would-be assassin in Mexico who was a paid informant for the US Drug Enforcement Administration and told US authorities all about their plot, which they code-named "Chevrolet."
FBI Director Robert Mueller said many lives could have been lost. But Preet Bharara, the US attorney in Manhattan, said no explosives were actually placed and no one was in any danger because of the informant's cooperation with authorities.