Iranian army chief Ataollah Salehi denied on Wednesday Israel's claim that arms it seized aboard a ship had been sent by Tehran to militants in the Gaza Strip, the official IRNA news agency reported.
"The Zionist regime is a regime blended with lies, producing lies and disseminating lies. We reject all such false news," IRNA quoted Major General Salehi as saying.
Naval commandos operating deep in international waters on Tuesday boarded the Liberian-flagged ship Victoria some 200 nautical miles west of Israel's territorial waters.
Prime Minister Benjamin Netanyahu said weapons found aboard, including sophisticated anti-ship missiles, were Gaza-bound and made in Iran.
"On the boat we discovered many weapons destined for terror groups in the heart of Gaza," Netanyahu said.
"We had clear evidence that the vessel was carrying weapons intended to harm Israel... The source of the weapons was Iran, which is trying to arm the Strip," he said.
But Salehi said the report came at a time when Israel was "suffering" because of Arab uprisings in the Middle East and North Africa.
"Following the overthrow of Egypt's Pharaoh (former president Hosni Mubarak), we will witness, God willing, the Zionist regime drowning in the Mediterranean waters in the future," he said.
Defence Minister Ahmad Vahidi also rejected the report, saying the Israelis weres playing victim to become "the centre of attention" by spreading "false" accusations.
"Iranian presence in the Mediterranean waters in very sensitive conditions was very valuable... and the Zionist regime wants to portray itself as a victim," Vahidi told IRNA.
In February, the Islamic republic for the first time sent two of its warships to the Mediterranean on a mission conveying "peace" to friendly countries.
Its arch foe Israel called the move a "political provocation" and put its navy on alert.