Images of the "successful" launch were carried by broadcaster IRIB, including video from an on-board camera.
According to Iran, the projectile is an intermediate-range missile with the range of 2,000 kilometers (about 1243 miles) and capable of carrying several warheads.
The Khorramshahr missile, weighing more than a ton, has been manufactured in a smaller and more tactical size.
With such a range, the missile would be easily capable of reaching Israel and Saudi Arabia.
Iran flaunted its new ballistic weapons today as President Hassan Rouhani vowed to boost the country's missile capabilities without seeking the permission of any other nation.
Colonel Ali Seify, Iran's military attaché in Azerbaijan, spoke at the event's opening ceremony and said his country's military power is defensive.
It wasn't immediately clear whether Trump had made a final decision to continue complying with the Iran nuclear deal, under which Tehran agreed to curb its nuclear activities in exchange for the lifting of global sanctions.
Trump used his U.N. speech to dismiss the landmark 2015 nuclear agreement with Iran, calling it an "embarrassment" and "one of the worst and most one-sided transactions the United States has ever entered into".
The president has said he's already made a decision about whether or not Iran is in compliance with the Joint Comprehensive Plan of Action nuclear deal.More news: Apple shares set for worst post-iPhone launch performance since 2013
Trump's comments raised concerns in some corners that the USA might go back on its agreement with Iran. If he decides that it is not, it could open the way for renewed United States sanctions and perhaps the collapse of the agreement.
The Iranian president said Tehran is playing a key role in restoring peace and stability to the region.
Iran's defense minister said Saturday that Khorramshahr is an strategic missile and is a symbol of Iranian scientists' capability, official IRNA news agency reported.
His comments came as Iran displayed a new missile at a military parade marking the anniversary of the outbreak of its devastating 1980-1988 war with Saddam Hussein's Iraq.
But Iran has strongly rejected the USA allegations that it has violated the United Nations resolution and that the missiles are not created to carry nuclear warheads.
Fitzpatrick agrees it would be a good idea to extend the Iran nuclear deal to include ballistic missiles.
"Whether you want it or not, we will defend the oppressed people of Yemen, Syria and Palestine", he said.
"Rouhani is playing hardball", said Sanam Vakil, an Iran scholar at Chatham House, a think tank in London, and at the Paul H. Nitze School of Advanced International Studies at Johns Hopkins University. "Iran will not be the first to violate the agreement but will decisively and strongly respond to the violations from any side".