The Iranian defence minister said that Iran has no military relations with the Palestinian leader Mr Yasser Arafat and had no involvement with a shipload of weapons intercepted by Israeli forces.
Israel and the Palestinian boat captain claim the arms, seized in the Red Sea, were sent by Iran for the Palestinians.
"Iran has played no role in this drama," Mr Shamkhani was quoted as saying by the official Islamic Republic News Agency.
"The Islamic Republic of Iran has had no military relations with Yasser Arafat and no steps have been taken by any Iranian organization for the shipment of arms to the mentioned lands," he added, and accused Israel of trying to portray Iran as a permanent threat to its security in order to influence US Middle East policy.