At least 10 were killed when gunmen opened fire on people from behind a viewing stand at Qods Boulevard of Ahvaz during the morning parade held to mark the former Iraqi dictator Saddam Hussein's invasion of Iran in the 1980s.
Following a deadly attack on a military parade in southern Iran, the country's foreign minister said that regional sponsors of terrorism and their "US masters" are to be held accountable for such assaults.
The semi-official ISNA news agency published photographs of the attack's aftermath, with bloodied troops in dress uniforms helping each other walk away.
The parade was marking the start of the Iran-Iraq War, which lasted between 1980 and 1988. At first, those present appear to think that the gunfire could be part of the ceremony, but then quickly realize it is a hostile attack and immediately begin to scramble from the scene.
Map of Iran locating Ahvaz
The semiofficial Fars news agency said two gunmen on a motorcycle wearing khaki uniforms carried out the attack.
The report called the attackers "Takifiri gunmen", a description that has previously been used for members of the "Islamic State" (IS) group.
The IRNA report said those wounded in the attack Saturday included a woman and a child. Iran has been deeply involved in the fight against IS in Iraq and has aided embattled Syrian President Bashar Assad in his country's long war. The province in the past has seen Arab separatists attack oil pipelines. The Guard also has vast holdings in Iran's economy.
Iran also suffered major attacks by IS extremists on June 7, 2017, when militants assaulted the parliament and the shrine of Ayatollah Ruhollah Khomeini in the capital, Tehran.