The missile, a two-stage solid-fuel system known as Sejjil, was launched from a site in western Iran near the Iraq border towards a target 800 km away.
"This is a whole new missile," Uzi Rubin, former director of Israel's Ballistic Missile Defense Organization, told Jane's . "Unlike other Iranian missiles, the Sejjil bears no resemblance to any North Korean, Russian, Chinese or Pakistani (missile technology). It demonstrates a significant leap in Iran's missile capabilities.
"Regardless of the success of the test, this missile places Iran in the realm of multiple-stage missiles, which means that they are on the way to having intercontinental ballistic missile capabilities," he added.
Iranian Defense Minister Brigadier General Mustafa Mohammad Najjar hailed the launch of the Sejjil missile as "very fast", adding that it would be easy to produce.
The new missile utilizes composite solid-propellant fuel and unlike the Shahab-3 medium-range ballistic missile (MRBM), which is launched only vertically, the Sejjil could be launched at a variable angle.
Video released by Iranian state media clearly shows a two-stage missile with a guidance system on the second stage and a triconic re-entry vehicle identical to that of the Shahab-3. However, the Sejjil's diameter appears greater than the 1.25 m of the Shahab.
Tehran launched an arms development program during the 1980-88 Iraqi imposed war on Iran, to compensate for a US weapons embargo. But Iranian officials have always stressed that the country's military and arms programs serve defensive purposes.
"This missile test was conducted within the framework of a defensive, deterrent strategy ... and specifically with defensive objectives," Najjar said, adding it had no connection with recent international events.
Najjar said that Sejjil had been manufactured at the Iranian Aerospace department of the Defense Ministry.
"This missile is a two-stage weapon with two combined solid-fuel engines and has an extraordinary high capability," Najjar said.
Iran's latest missile test followed intensified threats of military action by US or Israel against Iran's nuclear facilities, which the West claims form part of a covert weapons program, but has not proof to substantiate its allegations. Tehran vehemently denies the charge.
Military analysts believe that Sejjil shows the Islamic Republic's capability to defend its soil.
Solid fuel missiles are more accurate than the liquid fuel missiles of a similar range currently possessed by Iran.
Tim Ripley, an analyst at Jane's Defense Weekly, said, "Two stages could increase a missile's range."
Prior to the Wednesday test, Iran's missile capability was measured by its medium-range ballistic missile known as the Shahab-3, which means "shooting star" in Farsi, with a range of at least 800 miles (1,300 kilometers) which was improved and promoted to 1,200 miles (2,000 kilometers) in 2005.
Iran's Shahab-3 missile has been known to use liquid fuel. Missiles using liquid fuel are less accurate.
Tehran launched an arms development program during the 1980-88 Iraqi imposed war on Iran to compensate for a US weapons embargo. Since 1992, Iran has produced its own tanks, armored personnel carriers, missiles and a fighter plane.
The latest missile test came a day after the Islamic Revolution Guards Corps (IRGC) test-fired another missile called Samen near the Iraqi border.
Iran has said it would respond to any attack by targeting US interests and America's staunch ally Israel, as well as closing the Strait of Hormuz, a vital route for world oil supplies.
Tehran test-fired nine missiles in July, including one which could reach Israel and US bases in the Middle East.
Last week, Iran's military said US helicopters had been seen flying close to Iran's border and that it would respond to any violation.
It followed a cross-border raid last month by US forces into Syria, a move that was condemned by Damascus and Tehran.
The US attack on the Syrian village of Sukkariyah on October 26, has raised speculation about the likelihood of a US unilateral strike on the Islamic Republic.
Speculations that Israel could also bomb Iran mounted after a big Israeli air drill in June. In the first week of June, 100 Israeli F-16 and F-15 fighters reportedly took part in an exercise over the eastern Mediterranean and Greece, which was interpreted as a dress rehearsal for a possible attack on Iran's nuclear installations.
Both Washington and Tel Aviv possess advanced weapons of mass destruction, including nuclear warheads.
Iran has, in return, warned that it would target Israel and its worldwide interests in case it comes under attack by the Tel Aviv.
The United States has also always stressed that military action is a main option for the White House to deter Iran's progress in the field of nuclear technology.
Iran has warned that in case of an attack by either the US or Israel, it will target 32 American bases in the Middle East and close the strategic Strait of Hormoz.
An estimated 40 percent of the world's oil supply passes through the waterway.
In a Sep. 11 report, the Washington Institute for the Near East Policy says that in the two decades since the Iran-Iraq War, the Islamic Republic has excelled in naval capabilities and is able to wage unique asymmetric warfare against larger naval forces.
According to the report, the Islamic Revolutionary Guards Corps Navy (IRGCN) has been transformed into a highly motivated, well-equipped, and well-financed force and is effectively in control of the world's oil lifeline, the Strait of Hormuz.
The study says that if Washington takes military action against the Islamic Republic, the scale of Iran's response would likely be proportional to the scale of the damage inflicted on Iranian assets.
Intensified threats by Tel Aviv and Washington of military action against Iran contradict a recent report by 16 US intelligence bodies which endorsed the civilian nature of Iran's nuclear plans and activities.
Following the US National Intelligence Estimate (NIE) and similar reports by the IAEA head - one in November and the other one in February - which praised Iran's truthfulness about key aspects of its past nuclear activities and announced settlement of outstanding issues with Tehran, any effort to impose further sanctions or launch military attack on Iran seems to be completely irrational.
The February report by the UN nuclear watchdog, the International Atomic Energy Agency, praised Iran's cooperation in clearing up all of the past questions over its nuclear program, vindicating Iran's nuclear program and leaving no justification for any new UN sanctions.
The UN nuclear watchdog has also carried out at least 14 surprise inspections of Iran's nuclear sites so far, but found nothing to support West's allegations.
Following the said reports by the US and international bodies, many world states have called the UN Security Council pressure against Tehran unjustified, demanding that Iran's case be normalized and returned from the UNSC to the IAEA.
Meantime, a recent study by the Institute for Science and International Security (ISIS), a prestigious American think tank, has found that a military strike on Iran's nuclear facilities "is unlikely" to delay the country's program.