"The number of dead of the terrorist incident reached 24, some of whom were women and children among the spectators," IRNA said, adding that the death toll could rise further as many of the wounded were in critical condition.
Two gunmen opened fire on the large crowd of spectators watching the parade in the city of Ahvaz and then attempted to attack the viewing stand for official dignitaries before being shot and wounded by security forces, the semi-official Fars news agency said.
The rare attack targeted Khuzestan, a province bordering Iraq that has a large ethnic Arab community, and was a major battleground of the devastating 1980-88 conflict between Iran and Saddam Hussein's Iraq.
Saturday's rally was one of many in cities across Iran held to mark the anniversary of the launch of the war with massive Iraqi air strikes.
Attacks by Kurdish rebels on military patrols along the border in mainly ethnic Kurdish areas further north are relatively common.
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