Prices of bread, cooking oil and other staples have soared since President Donald Trump withdrew Washington from the 2015 nuclear deal a year ago and reimposed sanctions.
Hundreds of thousands of soldiers, militia members in camouflage fatigues, clerics, and ordinary citizens flocked to the streets of other Iranian cities and towns to commemorate February 11, 1979, when followers of Ayatollah Ruhollah Khomeini ousted a USA -backed monarch, Shah Reza Pahlavi.
"40 years of corruption".
Israeli Prime Minister Benjamin Netanyahu fired back on Monday night after Iran threatened "to 'raze Tel Aviv and Haifa" to the ground, saying that if Tehran attacks Israel, it will be the last anniversary of the Islamic Revolution that they celebrate.
State TV showed large crowds defying frigid weather and carrying Iranian flags while chanting "Death to Israel, Death to America", trademark chants of the revolution.
U.S. President Donald Trump tweeted on Monday that the Iranian government had let down its people. The regime in Iran has produced only #40YearsofFailure.
The festivities to mark the Iranian Revolution start every year on February 1, the day that Khomeini returned from exile to become supreme leader of the Islamic republic. "The long-suffering Iranian people deserve a much brighter future", Trump wrote on Twitter Monday.
The crowd of demonstrators in the rallies paid tribute to the late founder of the Islamic Republic, Imam Khomeini, under whose leadership the revolutionary movements triumphed over the despotic regime of Pahlavi on February 11, 1979.
"If this regime makes the bad mistake of trying to destroy Tel Aviv and Haifa, it will not succeed", he said.
The state has played up this year's anniversary as 40 is symbolic of maturity in the Islamic tradition and the age at which Prophet Mohammed received revelations from God.
The large turnout in state-sponsored rallies, in which USA and Israeli flags were burned, came as Iranians face mounting economic hardships many blame on the country's clerical leaders.
Gen. Qassem Soleimani, the head of Iran's elite Quds Force, attended a rally in the southern city of Kerman.
The usual banners filled the streets with slogans such as, "Death to America, Death to Israel and Victory to Islam".
But efforts to burn American and Israeli flags were hindered by torrential rain.
He compared the USA sanctions and economic hardships to "riding a bicycle when someone puts a stick in the wheels" but pointed to advances in other fields as more than making up for them.
Fakheri, who was one of the revolutionaries on the streets of Tehran in 1979, said she would defend the revolution all over again.