Iran's president said on Friday that a framework for a nuclear deal was just the first step toward building a new relationship with the world, after his countrymen greeted the announcement of the accord with celebrations in the streets.
U.S. President Barack Obama also hailed an "historic understanding", although diplomats cautioned that hard work lies ahead to strike a final deal.
The tentative agreement, struck on Thursday after eight days of talks in Lausanne, Switzerland, clears the way for a settlement to allay Western fears that Iran could build an atomic bomb, with economic sanctions on Tehran being lifted in return.
It marks the most significant step towards rapprochement between Washington and Tehran since the 1979 Iranian revolution, and could potentially end decades of international isolation, with far reaching political consequences in the Middle East.
It also left Washington's closest regional ally Israel fuming, with Prime Minister Benjamin Netanyahu declaring it could lead to nuclear proliferation, war and even his country's destruction.
In a televised speech on Friday, President Hassan Rouhani, a relative moderate elected in a landslide two years ago on a promise to reduce Iran's isolation, said the nuclear talks were just the start of a broader policy of opening up.
"This is a first step towards productive interactions with the world," he said.
"Today is a day that will remain in the historic memory of the Iranian nation," he added. "Some think that we must either fight the world or surrender to world powers. We say it is neither of those, there is a third way. We can have cooperation with the world."
The deal still requires experts to work out difficult details before a June 30 deadline and diplomats noted that it could still collapse at any time before then.
"We are not completely at the end of the road and the end of the road should be in June," said French Foreign Minister Laurent Fabius. "Nothing is signed until everything is signed, but things are going in the right direction."
Netanyahu, who has the ear of Republicans who control both houses of the U.S. Congress, said the powers negotiating with Iran must add a new demand that Tehran recognise Israel's right to exist. Israel believes Iran's goal is to destroy it.
Under Thursday's terms, Iran would cut back its stockpiles of enriched uranium that could be used to make a nuclear bomb and dismantle most of the centrifuges it could use to make more. Intensive international inspections would prevent it from violating the terms in secret. Washington said the settlement would extend the "breakout time" needed for Iran to make a bomb to a full year, from 2-3 months now.
For Iran, it would eventually lead to the end of sanctions that have cut the oil exports that underpin its economy by more than half over the past three years.
Still, decades of hostility remain between countries that have referred to each other as "the Great Satan" and part of the "axis of evil". Obama and Rouhani, who both took risks to open the dialogue with secret talks two years ago, will each have to sell the deal to sceptical conservatives at home.
U.S. Republicans have demanded that the Congress they control be given the right to review the deal.
Celebrations erupted in the Iranian capital after the deal was reached. Cars in Tehran honked horns as passengers clapped.
Conservative clerics signalled their support on Friday, including on behalf of Ayatollah Ali Khamenei, the supreme leader, whose authority exceeds that of the elected president.
In the weekly sermon at Tehran University, Ayatollah Mohammad Emami-Kashani, a 78-year-old hardline cleric, said Khamenei backed the negotiating team. Emami-Kashani praised the negotiators as "firm, wise and calm" and congratulated Rouhani and Foreign Minister Mohammad Javad Zarif.
Obama described the agreement as an "historic understanding" and compared it with nuclear arms control deals struck by his predecessors - including Republicans - with the Soviet Union that "made our world safer" during the Cold War. He also cautioned, however, that "success is not guaranteed".
With Russia and China joining the United States, Britain, France and Germany as signatories to the deal, and even Iran's Sunni Arab enemies cautiously welcoming it, the only country that was publicly opposed was Israel.
"Israel demands that any final agreement with Iran will include a clear and unambiguous Iranian commitment to Israel's right to exist," Netanyahu said in a statement on Friday.
Earlier he expressed his vehement opposition in a phone call with Obama. In a statement released after the conversation, he said a deal based on the Lausanne framework "would threaten the survival of Israel".
"This deal would legitimise Iran's nuclear programme, bolster Iran's economy and increase Iran's aggression and terror throughout the Middle East and beyond," he said. "It would increase the risks of nuclear proliferation in the region and the risks of a horrific war."
Iran's other main foe in the region, Saudi Arabia, was more cautious, supporting the agreement in public, although its mistrust remains deep. It launched a bombing campaign a week ago against Iranian allies in Yemen.
Germany's Foreign Minister Frank-Walter Steinmeier said it was too early to celebrate. But he also said Israel should study the deal more closely before opposing it.
Global oil prices, which have already fallen sharply in the past year, tumbled on Thursday on the prospect that Iran will eventually be able to restore its exports. Brent crude was off as much as 5 percent at one point before recovering.
France's Fabius said Iran's economy stood to gain $150 billion in relief from the sanctions.
Saudi Arabia's new ruler, King Salman, told Obama by phone on Thursday he hoped a final nuclear settlement would "strengthen the stability and security of the region and the world".
However, the Saudis and other Sunni Arab states are concerned about a deal that benefits Iran, the leading Shi'ite Muslim power, which they see as a dangerous rival expanding its influence in Iraq, Syria, Yemen and elsewhere.
A Gulf source close to official Saudi thinking said the deal seemed to include valuable safeguards: "It's about verification. If they don't comply, the boycott will be reimposed. This is a reassuring result."
But he added a sceptical note: "Iran may think that as a result of this accord it is on the road to respectability."